Liberation Day: the start of a trade war?
by Bert Vandorpe
In international trade, businesses often face import tariffs. Those taxes are imposed by countries to protect their domestic economies, influence pricing mechanisms, or sanction foreign nations. To promote trade flows, countries frequently enter into free trade agreements or establish customs unions. The European Union (EU) is one such customs union and currently has over 40 free trade agreements with more than 70 countries. In an increasingly globalized world, it makes sense to reduce trade barriers, typically resulting in greater economic growth and prosperity.
Trump puts trade relations to the test
In a speech delivered on April 2, proclaimed Liberation Day, U.S. President Donald Trump announced a series of protectionist measures aimed at eliminating the American trade deficit. These include a minimum import tariff of 10% on all imported goods. Certain trade partners will face even higher “reciprocal” tariffs intended to address perceived imbalances in trade flows.
The European Union is among the most affected, hit with a 20% import tariff, which Trump claims is half of what the EU imposes on American goods. The European Commission, however, argues that the average EU tariff on U.S. products in 2023 was only around 1%.
This new 20% tariff comes on top of previously announced duties of 25% on cars, steel, and aluminum. These measures will take effect on April 9, 2025.
What does this mean for your business?
These trade measures have a direct impact on companies exporting to the United States. Suppliers to these exporters will also feel the consequences.
It’s crucial for such businesses to map out their international trade flows and transactions and assess how these new tariffs will affect their bottom line. Exploring alternative export markets may also be a strategic move.
Additionally, it remains to be seen how the European Union will respond to these new trade sanctions.
Do you have questions about how these new import tariffs and trade restrictions might affect your business? Feel free to contact one of our experts at tax@vdl.be or use the contact form below.
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Bert Vandorpe
Manager Tax bert.vandorpe@vdl.be
Disclaimer
In our opinions, we rely on current legislation, interpretations and legal doctrine. This does not prevent the administration from disputing them or from changing existing interpretations.
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