The European Union has introduced retaliatory tariffs on €2.8 billion worth of US goods. The move comes after US President Donald Trump imposed steep duties on European steel and aluminium earlier this month. Tariffs have been imposed on products such as bourbon whiskey, Harley Davison motorbikes, orange juice and peanut butter.
Carol Lynch, a partner in the Customs and International Trade department at BDO, said a range of products across a number of industries has been targeted by the European Union. These include agrifoods such as sweetcorn and rice, orange and cranberry juice up to denim, motor bikes and - critically for Ireland - a lot of steel, scaffolding, iron and steel fastners and construction products.
Ms Lynch said that 50% of the tariffs are in the iron and steel industries, so there is a really heavy focus on anything that is made from iron, steel and aluminium. Products that a construction company - scaffolding, iron and steel containers and fastners - will be heavily targeted, she cautions.
She believes that the higher costs will be passed on to consumers. Taking the example of orange juice, Ms Lynch said that a carton of juice costs about €1.20, including 10-12 cent of duty. From today, that duty will rise to 20 cent, which will see the retail cost of the juice rise to about €1.40. Retailers must decide if they will pass on that 20 cent to their customers or absorb it themselves, which will hit their bottom line.
Explaining how the duty works, she says that the product - orange juice - arrives at Dublin Port and in order to clear customs, a declaration is lodged with the customs authorities. Customs duties and import VAT are paid at that point directly to the Revenue Commissioners and they pay the money back to Brussels.
On Brexit and if a deal on the UK leaving the European Union is not secured, Ms Lynch said that a huge range of tariffs may apply in a hard Brexit scenario, including a tariff of 6.5% on plastic packaging - which would be a huge issue for Irish companies as they import a lot of packaging from the UK - and anything up to 40% tariffs on Irish agri-food products.
Ms Lynch stressed it is really important that pragmatic steps are taken now to plan for a hard Brexit and plan for a potential cliff-edge, as the Airbus boss announced today. "It's not project fear - it's just what a realistic business would do," she stated. She said that over the past year, BDO has been working with clients based on that approach - adding that a hard Brexit scenario is now looking very real unfortunately.
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