Trade relations between the European Union and the US have become more complex since President Donald Trump re-launched import tariffs. In retaliation, on March 12, the EU launched its own import tariffs to protect European businesses, workers, and consumers from the consequences of unjustified trade restrictions.

These so-called ‘retaliatory measures’ will take effect on April 1. This means that tariffs will be applied to products, including textiles and leather goods. The European import tariffs are expected to cover goods worth approximately 18 billion euros. The ‘retaliatory measures’ are intended to ensure that the total value of the EU measures corresponds to the increased value of trade affected by the new US tariffs. What do the European import tariffs on American products mean for the fashion industry?

What you need to know about the EU retaliatory measures on US import tariffs

The import tariffs announced on March 12 are actually ‘retaliatory measures’ that were initially launched in 2018 in response to the Trump administration. Focusing on the fashion industry and examining the list of product categories, it appears that many products containing textiles will be subject to the 25 percent import tariffs. For example, rugs and suitcases containing textiles will fall under the new taxes, as will apparel, footwear, and headwear for women, men, and children containing textiles sourced from American companies. The same applies to products containing leather.

Several media outlets reported on the day the new import tariffs were announced that jeans would become more expensive. Fashion entrepreneur Daan Broekman called this "fake news" on LinkedIn. Why? The definition of "goods originating in the US" implies that goods are manufactured in the US, as explained later in this article. However, many American fashion companies, such as Levi’s, Wrangler, and Lee, have their items produced in various factories located around the world. American companies can therefore change the source of their products, allowing them to circumvent the increased tariffs. The prices of these items will therefore increase less sharply, provided they bypass the regulations.

However, it remains to be seen how the definition of "originating in the US" will be applied. FashionUnited asked a spokesperson for the European Union for clarification, but they indicated that they still needed to investigate this. The established principles of customs law stipulate that a product originates from a specific area if it is wholly obtained there or has undergone "substantial transformation", as Judith Bussé and Lorenzo Di Masi, lawyers at international law firm Crowell & Moring, wrote for FashionUnited back in 2018. This refers to a process that adds a specific characteristic to a product that it did not previously possess. This does not include labeling, packaging, or applying a logo. “With respect to jeans, other garments, and cosmetic products, which generally have a rather complex production cycle, the meaning of ‘substantial transformation’ can be subject to debate. By having the final product transformation take place outside the US, manufacturers can mitigate the negative effects of the measures.”

The European import tariffs on American products could impact the fashion industry. However, history shows that many American companies have ways to circumvent them. Because the production processes of many large American fashion companies are located globally, they can limit the extra costs, thus minimising price increases for European consumers. However, it remains to be seen how the definition of "originating in the US" will be interpreted. This will determine the ultimate consequences of the measures.

This article was translated to English using an AI tool.