On 5 March, the EU and the U.S. communicated a joint statement concerning the mutual suspension for four months of the tariffs related to the World Trade Organization (WTO) Aircraft disputes. The relevant implementing measures were published on 11 March 2021, including the Commission Implementing Regulation 2021/425 stating that the tariffs will be suspended starting on March 11 of this year and will end on July 10 2021 (as of July 11 2021 they will be applied again) and the US notification.
What does this mean for your business?
The agreement means that the EU and the U.S. will not apply the additional tariffs for certain products. It is a significant development, as the tariffs were set between 15-25% , adversely affecting profitability margins of EU companies exporting to the U.S.
Products that will benefit from the tariff suspension, when imported in the EU, include amongst others: (i) agriculture products (such as certain types of cheeses, cocoa powder) and tobacco, (ii) whey proteins products, (iii) polyethylene films, (iv) handbags, (vi) cotton, (vii) certain types of motor vehicles and (viii) video games consoles.
The relevant products that will benefit from the tariff suspension, when imported in the U.S., include amongst others: (i) new civilian aircrafts above 30 tones, (ii) spirits from grapes and other products, (iii) dairy products, (iv) clothing and (v) electric tools.
What happens now?
The suspension of the U.S.-EU tariffs is a positive development for affected companies. Until mid-July 2021, the parties will focus on finding a permanent solution.
At this stage, it cannot be precluded that the mutually imposed tariffs would be permanently phased out. We will come with an update as soon as there is more clarity on this.
If you would like to know whether your company can benefit from the tariff suspension, please contact your usual PwC customs and international trade specialist at PwC.
We can also assist in determining the eligible products scope in relevant trans-Atlantic transactions, as well as help with reviewing whether there are any long-term solutions possible, in case the EU and the U.S. will not reach a permanent solution.