Just when we thought US duty rates had settled down we hear of a new proposed set of surcharges for 2019.
These are being proposed on ‘national security grounds’ the target being the automotive sector, both finished cars and car parts. The proposal was submitted to President Trump on the 17 February this year and he has 90 days starting from the date he received the report to decide to accept the recommendations in part, in full, or at all.
He and his advisors will also decide whether cars and car parts will get hit with a 5% low rate of additional duty, a medium rate of 10% or a high impact rate of 25%. These are in addition to existing duty rates.
This will affect different trade lanes in different ways, Japan mainly exports finished cars to the US, though its car companies produce many domestically. 61% of car parts into the USA come from China so this trade may be hit hard. With regard to Europe, Germany would be hit hard as 78% of Europe’s car exports to the USA come from Germany.
This could be the USA creating a bargain position to lower tariffs on US exported goods to Japan, China and the EU, though only time will tell.
If enacted these duty surcharges are bound to result in retaliation, from the EU especially.