A multilevel action in support of exporting companies
General Introduction
The tariff measures enacted by the United States have had a direct impact on a number of strategic European sectors. In particular, the following industries have been subjected to duties:
automobiles and auto parts, facing tariffs up to 25 percent under Section 232;
steel and aluminum products, with duties of 25 percent and 10 percent respectively;
agri-food products (wines, cheeses, olive oil), subject to additional duties;
manufactured goods, mechanical and electronic equipment.
The full list is available through the Office of the U.S. Trade Representative (USTR) and is categorized by the customs classification (HS Code) and preferential origin of the product.
With the announcement by the U.S. administration of new across-the-board tariffs on imports - including a 10 percent tariff on all imported goods and an additional 20 percent tariff on goods originating from the European Union - a new phase of systemic tension in international trade has begun. These measures, introduced under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962, reflect an increasingly unilateral direction in U.S. trade policy.
This situation has been further exacerbated by the recent U.S. decision to notify its withdrawal from the World Trade Organization (WTO) under Article XVI:5 of the Marrakesh Agreement. This decision entails the end of U.S. adherence to multilateral trade obligations, renders the Dispute Settlement Mechanism (DSM) inapplicable to the United States and undermines the multilateral framework for legal protection in trade.
Audit and preventive risk management
In response, European companies must promptly initiate an internal audit to assess tariff exposure and verify the legal robustness of their international trade agreements. The audit should include:
analyzing the economic impact of duties on individual customs items;
assessing the possibility of transferring the tariff burden;
reviewing existing contractual clauses (hardship clauses, change in law, price revision);
reclassifying customs origins and evaluating potential supply chain restructuring.
I. Public Enforcement – Institutional Action
1. At the level of the European Union:
The European Union has several regulatory tools at its disposal to respond to discriminatory or coercive measures by third countries:
Regulation (EU) 2021/167 empowers the EU to adopt autonomous countermeasures in cases of violations of international obligations;
Regulation (EU) 2023/2675 (anti-coercion instrument) enables the EU to address coercive practices through actions such as duties, exclusion from public procurement and other measures;
Regulation (EU) 2022/2560 (FSR - Foreign Subsidies Regulation) allows the EU to counter the distorting effects of foreign subsidies in procurement and investment contexts.
These instruments can be activated following the collection of economic and legal evidence from businesses, in coordination with national authorities and with the political support of both the EU Parliament and the Council. Specifically, Article 13 of the ACI (Anti-Coercion Instrument) governs a particularly targeted information gathering mechanism involving, inter alia, businesses (Art.13.2 "For the purposes of paragraph 1, the Commission shall inform and consult stakeholders, in particular associations acting on behalf of Union economic operators and trade unions, that could be affected by potential Union response measures, and Member State’ authorities involved in the preparation or implementation of legislation that regulates the sectors that could be affected by those measures.").
II. Private Enforcement - Individual Protection
Businesses may bring jurisdictional actions against U.S. authorities:
before the U.S. Court of International Trade (CIT), where they may challenge the legality of imposed duties under the Administrative Procedure Act and the Commerce Clause;
before the U.S. International Trade Commission (USITC), by requesting sector-specific determinations regarding the impact of tariff measures;
through class actions brought by affected importers or consortia.
Notable precedents include Transpacific Steel LLC v. United States (2020), where the ITC annulled duties due to a violation of the separation of powers, and Aluminum Association v. United States (2021), which addressed breaches of the APA.
In addition to domestic legal remedies, European companies may invoke international protection instruments, drawing on international trade and investment agreements (FTAs and IIAs), bilateral investment treaties (BITs) and the ICSID Convention of 1965. Although the Italy-U.S. BIT has been rescinded, some European companies may still rely on BITs still in force signed by EU member states, such as the Netherlands or Germany, thus benefiting from a “multilevel structure”. Moreover, it is possible that Italian economic operators have invested in the United States via companies incorporated in Canada or Mexico: they may be eligible to invokethe UMSCA agreement (in effect since 1 July 2023). Arbitration may be triggered in cases involving measures equivalent to indirect expropriation, breach of fair and equitable treatment (FET) standard or discriminatory actions.
Relevant precedents include:
Metalclad v. Mexico: an environmental measure deemed equivalent to an expropriation;
CMS v. Argentina: violation of the FET standard due to extraordinary regulatory measures;
Occidental v. Ecuador: arbitrary revocation of an oil concession which was considered an act of expropriation.
Vento Motorcycles Inc. v. Mexico (6 July 2020): a joint venture established in Mexico by U.S. investors and adversely affected by Mexican duties (the so-called trade-related measures) was found to be a protected investment under NAFTA (now replaced by the UMSCA).
Where an investment takes the form of a stable presence (e.g. joint venture, subsidiary, establishment), or involves an economic transaction of a certain duration (through corporate interests and contractual rights), arbitration offers an effective and complementary tool to administrative or jurisdictional remedies.
III. International Arbitration and Bilateral Treaties
1. Investor-State Arbitrations:
European companies with investments in the U.S. may resort to arbitration procedures based on bilateral treaties (BITs). While the 1983 Italy-US BIT was terminated in 2013, it provides a 10-year sunset clause that could still cover investments made prior to its termination. Certain BITs concluded by other EU member states (e.g., Netherlands, Germany) remain in force and may offer indirect access to ISDS protection.
Noteworthy ICSID precedents include Metalclad v. Mexico and CMS v. Argentina, which reaffirmed the principle that states can be held liable for measures equivalent to indirect expropriation or violation of the fair and equitable treatment (FET) standard.
IV. Systemic and administrative impacts
1. Impact on public administrations:
Contracting authorities may have to deal with price increases on goods subject to duties, requests for revised fees, or litigation. Additionally, they must reassess the eligibility of U.S. operators, who no longer meet the reciprocity requirements.
2. Foreign Subsidies Regulation (FSR):
Non-EU companies benefitting from government subsidies may face exclusion from procurement processes or scrutiny in merger transactions. The FSR represents a strategic enforcement tool in the current post-WTO landscape.
V. Customs classification and rules of origin
When a product originating in the EU is exported to the United States and subsequently undergoes processing, it is crucial to determine whether that processing is sufficient to alter the product’s customs origin. According to the principles of international customs law and the World Customs Organization (WCO) regulations, a change in origin occurs when a “substantial transformation” takes place, which implies a change in the customs heading at the HS code level (so-called “heading jump rule”).
If the processing carried out in the US qualifies as substantial:
the final product may be considered to have US origin;
this may affect its eligibility for tariff benefits upon reimportation into the EU (e.g., under preferential rules of origin);
there is a risk of double taxation both upon entry into the U.S. and upon return to the EU, if no customs relief mechanism is available.
If, on the other hand, the processing is merely incidental (e.g., simple packaging or assembly), the product retains its EU origin. Therefore, companies must conduct documentary audits, obtain certificates of origin and carry out detailed technical assessments to prevent risks of disputes and double taxation.
Accurate determination of both the customs code (HS code) and the origin of goods is critical in determining duty liability. In the case of export to the US and subsequent processing, it is essential to determine whether such processing is sufficient to result in a change of origin. The absence of preferential post-processing agreements pose risks of double taxation and requires accurate traceability.
Conclusions
The erosion of the multilateral trade system and the adoption of discriminatory measures by the U.S. call for an integrated approach, based on internal audits, EU enforcement actions, contractual instruments and international arbitration procedures. Only through effective coordination among economic operators, public institutions and European authorities can the economic interests of both States and the EU as a whole be adequately protected.
