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PRIVILEGED AND CONFIDENTIAL: ATTORNEY-CLIENT COMMUNICATIONS: CTDA MEMBER UPDATE ON TRADE ISSUES RELEVANT TO THE CERAMIC TILE INDUSTRY
President Trump last evening issued an Executive Order ("EO" or "the Order") addressing the upcoming modifications to US tariffs on imported products (attached). The Order sets individual baseline tariff rates for our trading partner countries, with 15 percent established for products from the European Union (“EU”) and 25 percent for products from India, and with varying rates assigned to other countries. Aside from this, the primary impact of the Order is as follows:
- Delayed effect - The additional US tariffs were to take effect at 12:01 am this Friday morning (today). The EO postpones their implementation date for seven days, until next Friday, August 8 at 12:01 am;
- No stacking of MFN and Baseline tariffs for EU products - At least with regard to products from the EU, the Executive Order makes clear that the 15 percent new baseline tariff will not be added to the current MFN tariffs. Were this to be the case, the tariff on ceramic tile from EU countries such as Italy and Spain would have totaled 23.5 to 25 percent; instead, the new tariff on ceramic tile from these countries will not exceed 15 percent per the following, as stated in the section entitled “Tariff Modifications”, Section 2(c):
As provided in Annex I to this order, the additional ad valorem rate of duty applicable to any good of the European Union is determined by the good’s current ad valorem (or ad valorem equivalent) rate of duty under column 1 (General) of the HTSUS (“Column 1 Duty Rate”). For a good of the European Union with a Column 1 Duty Rate that is less than 15 percent, the sum of its Column 1 Duty Rate and the additional ad valorem rate of duty pursuant to this order shall be 15 percent. For a good of the European Union with a Column 1 Duty Rate that is at least 15 percent, the additional ad valorem rate of duty pursuant to this order shall be zero. (emphasis supplied).
This tariff action will actually make the importation of ceramic tile from the EU into the US cheaper as there is currently a combined tariff of the MFN rates of 8.5 – 10.0 percent plus the so-called “reciprocal tariff” on EU goods of 10 percent for an 18.5 to 20.0 percent total current tariff rate.
Tariff rates for other individual countries, including India, are listed in Annex I; I do not see a reference therein to how “stacking” will be considered for those tariffs with the current MFN tariff rates. Any country not listed in Annex 1 will be subject to a flat 10 percent baseline tariff rate.
The President also separately took action with regard to Mexico and Canada. Given purported progress in bilateral negotiations, the US postponed increasing tariffs on Mexico which are currently 25 percent with exceptions for products qualifying as originating and thus entitled to duty-free status under USMCA, formerly NAFTA. US tariffs on Canada will rise from 25 to 35 percent, but also with the exception for USMCA qualifying goods.
If you have any questions, please contact CTDA Legal Counsel Robin Grover at (202) 302-1653. We will promptly alert you to any further developments regarding this and other trade issues.
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