European businesses that export to the US could face significant additional bureaucratic headaches if Donald Trump follows through on his threat to slap tariffs on eight individual European countries, trade analysts have warned.
The US president has threatened to impose a blanket additional 10 per cent tariff on the eight countries — Denmark, Sweden, France, Germany, the Netherlands, Finland, Norway and the UK — rising to 25 per cent on June 1, after they sent delegations to a military exercise in Greenland. Trump wants the US to take ownership of the strategically important island.
There was no technical reason why the US could not impose tariffs on exporters from the individual countries, experts said, even though six of them were members of the EU bloc, which negotiates trade agreements collectively.
Sam Lowe, trade lead at consultancy Flint Global, said there were already precedents for US tariffs aimed specifically at individual member states, such as those linked to the long-running Boeing-Airbus subsidy dispute.
That row, which ran for 17 years to 2021, saw EU states with a stake in Airbus production, including France, Spain, the UK and Germany, hit by levies on particular products, such as cheese, whisky or clementine oranges, that were important to their economies.
“Blanket tariffs on a subset of member states would be difficult to enforce, but not impossible,” he added. “There are also other ways of singling out some states more than others by targeting products that are mainly produced in one or two member states.”
William Bain, head of trade policy at the British Chambers of Commerce, said that since the US focused on the “country of origin” of a good when determining what tariff to apply, this would enable the US to single out individual EU states or Norway and the UK.
US-EU trade spats have, in the recent past, led to retaliatory tariffs on products from specific countries, such as the 44 per cent US levy imposed on Spanish olives in 2018 that caused exports to the US to fall by 60 per cent.
However, imposing across-the-board additional tariffs on a subset of EU countries would take EU-US trade conflicts a step further, according to Allie Renison, a former UK trade department official now at consultancy SEC Newgate.
“A proactively unilateral approach to distinguishing between European countries on tariffs is technically within the US’s gift, but it is absolutely poking the bear,” she said. It would be highly complex and would cause potential management headaches for both European producers and US importers.
Last year, the EU accepted 15 per cent tariffs on most of its exports to the US as part of its “reciprocal” tariff deal agreed with Trump, with additional tariffs on some products, such as steel and aluminium, which attract 50 per cent.
Trump’s latest threat could, in theory, stack an additional 10 per cent tariff on the seven European countries on those tariffs, as well as on the UK’s 10 per cent rate, although no details on how the tariffs will operate have been published by US authorities.
Trade experts said the integrated nature of EU supply chains, with parts criss-crossing borders from factories in multiple countries, would make it complex to determine from which country a product originated — the main factor in assessing what tariff an importer must pay.
Lowe added that, while it would be highly complex, ultimately the US could enforce the tariffs by warning that the burden of complying with such rules would fall on companies.
“Most companies don’t look to break the law. As a result, the obligation falls on the company and the US importer — the message is ‘declare goods correctly and if we find out you’ve mis-declared origin we’ll slap you with a penalty’,” he said.
Assuming the tariffs on individual countries did come into force, the EU could be expected to retaliate collectively against the US measures, according to Michael Gasiorek, director of the Centre for Inclusive Trade Policy at the University of Sussex.
“We may be coming to the point where countries actually need to and will co-ordinate a response to Trump. Trump has crossed a line in going beyond simply some bilateral market-access [trade] negotiation to try and force Nato countries apart. I cannot see them agreeing to this,” Gasiorek said.
However, exporters in individual countries would still be hit, depending on their key exports to the US, he added. In the case of the UK they are pharmaceuticals, chemicals, advanced manufacturing, autos and aerospace.
The UK has agreed a 10 per cent “reciprocal” tariff on most goods to the US as part of its own deal with Trump last year, alongside a zero-tariff quota of 100,000 cars and a separate 25 per cent tariff on steel and aluminium products.
Bain said Trump’s additional Greenland tariffs would have a “real impact” on UK plc if European diplomats could not find a way to defuse the situation, and urged the government to negotiate to remove the threat.
“The value of [UK] goods exported to the US annually is £60bn, meaning tariffs of 10 per cent would result in £6bn in additional business costs, hitting the UK’s 40,000 goods exporters to the US at a time when the cost of doing business is already significant,” he said.