Special Trump Tariffs Imposed on EU Goods Create Opportunities for U.S. Customs Duty Refunds

Since October 18, 2019, President Trump’s Administration has begun to impose additional customs duties that didn’t previously exist. These tariffs can reach up to 25% on various goods exported from the European Union to the United States.  President Trump’s Administration enacted these additional duties to retaliate for the allegedly illegal subsidies provided to Airbus. These circumstances were authorized by the World Trade Organization (WTO).

Exporter companies with products targeting the U.S., and whose sales have been impacted by Trump Airbus Tariffs, should consider working together with their U.S. counterparties – whether related or unrelated – to determine whether those tariffs were properly paid.

The key here does not lie in the legality of the tariff itself, but in how the U.S. officials classify the merchandise within the tariff

Due to our wide experience in this field, we have detected that sometimes, there is a way to show that the goods should have entered the U.S. under a tariff classification that is not subject to Trump Airbus Tariffs.

For reclassifications, it is only possible to protest tariffs paid during the previous 16 months.

In this case, upon a successful reclassification, the importer will avoid those customs duties going forward. Also, the importer will be eligible for retroactive duty refunds of the higher tariffs paid, generally during the previous 16 months.

Most affected goods are foodstuffs

The WTO authorized the Trump Administration to impose retaliatory duties worth $7.5 billion per year. This amount is the ultimate goal these extra annual tariffs were designed to reach, and it will be collected by the U.S. Treasury.  While the retaliatory duties apply to exported aircraft, most of the affected tariff provisions cover foodstuffs. They also affect a variety of sensitive industries such as garments made in the UK, tools and optical equipment made in Germany, and olives from Spain.  Given their significance, any company affected by these tariffs will presumably be aware of them.

There is an established dispute procedure, and the refund option is real and very significant.

What companies may not be aware of, however, are the opportunities that routinely arise for refunds of U.S. customs duties when trade wars erupt.

There are many cases where the United States has refunded improper retaliatory tariff payments.

This is because there is often confusion over proper tariff classification, country of origin, or other customs compliance issues that affect whether the retaliatory tariffs actually apply to the merchandise.  The result is that U.S. duties are often paid when they did not need to be.

Examples

For example, in 1998 during a prior trade war between the parties, U.S. courts ruled that canned tomatoes imported from Italy were not subject to 100% retaliatory duties, and were only subject to the normal customs duty rate of 7.5%.  According to the court, the simple reason for this was because the goods properly entered under a tariff provision covering tomato “sauce” instead of tomato “preserves”.  In that case, the U.S. importer recovered several years’ worth of customs duty overpayments.

More recently, in 2009, U.S. courts ruled that the entire “Beef Hormone War” retaliatory tariff scheme had terminated by operation of law back in 2007, as it had not been effectively renewed by the U.S. government.  The result was millions of dollars in refunds of U.S. customs duties for companies that had imported EU foodstuffs, paid attention, and pursued their claims.

It is not just the importer who has an interest in lower duties.

In principle, it is only the U.S. importer that technically has the right to contest the payment of duties before U.S. Customs and the courts. However, in prior trade wars we have witnessed trade associations, exporters, and importers all working together to achieve retroactive duty refunds and lower the U.S. import duties going forward. Given the magnitude of potential refunds, parties often find that it makes sense to work together as a team.

Administrative protest with U.S. Customs; Specialized U.S. tariff court

As far as the refund process is concerned, any challenge to tariff classification or country of origin needs to be commenced by filing an administrative protest with U.S. Customs. Protests must be filed within 180 days of when the shipment “liquidates”.  If U.S. Customs agrees with the importer’s protest, it grants the claims and then refunds the duties with interest, often in a matter of six months or so.  If U.S. Customs disagrees with the importer’s protest, the importer has 180 days from the date U.S. Customs denies the protest to pursue its claim further at the U.S. Court of International Trade in Manhattan.

We work on a contingency fee

ILP Abogados is actively collaborating to identify and work with Spanish companies who have exported their products to the U.S. so that they can retrieve any improperly paid tariffs.

If your company or U.S. trading partner is affected by the Trump Airbus Tariffs, and you wish to explore the possibility that those customs duties were improperly paid, we would be pleased to set up an initial call to determine whether an opportunity might exist.