The China Mail - How tariffs in the EU work

USD -
AED 3.672498
AFN 65.511367
ALL 80.979656
AMD 377.215764
ANG 1.79008
AOA 916.999774
ARS 1404.005902
AUD 1.406539
AWG 1.8025
AZN 1.710149
BAM 1.643792
BBD 2.01512
BDT 122.389289
BGN 1.67937
BHD 0.376925
BIF 2965.35987
BMD 1
BND 1.266678
BOB 6.913941
BRL 5.198702
BSD 1.0005
BTN 90.584735
BWP 13.12568
BYN 2.874337
BYR 19600
BZD 2.012178
CAD 1.351665
CDF 2210.000229
CHF 0.766499
CLF 0.02167
CLP 855.660442
CNY 6.91085
CNH 6.907975
COP 3667.46
CRC 495.12315
CUC 1
CUP 26.5
CVE 92.677576
CZK 20.3529
DJF 178.163649
DKK 6.26898
DOP 62.707755
DZD 129.282663
EGP 46.9128
ERN 15
ETB 155.312845
EUR 0.83913
FJD 2.18635
FKP 0.731875
GBP 0.730385
GEL 2.690149
GGP 0.731875
GHS 11.010531
GIP 0.731875
GMD 73.49767
GNF 8782.951828
GTQ 7.672912
GYD 209.326172
HKD 7.817315
HNL 26.438786
HRK 6.323601
HTG 131.239993
HUF 317.557977
IDR 16781
ILS 3.079485
IMP 0.731875
INR 90.725981
IQD 1310.634936
IRR 42125.000158
ISK 121.68014
JEP 0.731875
JMD 156.538256
JOD 0.709029
JPY 153.251502
KES 129.000113
KGS 87.450332
KHR 4032.593576
KMF 414.400677
KPW 899.999067
KRW 1449.11055
KWD 0.30684
KYD 0.833761
KZT 492.246531
LAK 21486.714209
LBP 89522.281894
LKR 309.580141
LRD 186.599091
LSL 15.938326
LTL 2.95274
LVL 0.60489
LYD 6.307756
MAD 9.121259
MDL 16.933027
MGA 4429.297238
MKD 51.734701
MMK 2099.913606
MNT 3568.190929
MOP 8.056446
MRU 39.329271
MUR 45.680054
MVR 15.449683
MWK 1734.822093
MXN 17.15015
MYR 3.916046
MZN 63.903157
NAD 15.938527
NGN 1352.719817
NIO 36.82116
NOK 9.4641
NPR 144.931312
NZD 1.64988
OMR 0.384502
PAB 1.000504
PEN 3.359612
PGK 4.2923
PHP 58.228989
PKR 279.886956
PLN 3.54057
PYG 6585.112687
QAR 3.647007
RON 4.2725
RSD 98.513038
RUB 77.349032
RWF 1460.743567
SAR 3.750546
SBD 8.058149
SCR 13.737364
SDG 601.501412
SEK 8.859249
SGD 1.26217
SHP 0.750259
SLE 24.349725
SLL 20969.499267
SOS 571.774366
SRD 37.890067
STD 20697.981008
STN 20.59161
SVC 8.754376
SYP 11059.574895
SZL 15.922777
THB 31.076988
TJS 9.389882
TMT 3.51
TND 2.882406
TOP 2.40776
TRY 43.644298
TTD 6.786071
TWD 31.385497
TZS 2601.903976
UAH 43.08933
UGX 3556.990006
UYU 38.36876
UZS 12326.389618
VES 384.79041
VND 25982
VUV 119.366255
WST 2.707053
XAF 551.314711
XAG 0.011975
XAU 0.000198
XCD 2.70255
XCG 1.803175
XDR 0.685659
XOF 551.314711
XPF 100.234491
YER 238.325039
ZAR 15.86315
ZMK 9001.196253
ZMW 19.034211
ZWL 321.999592
  • RYCEF

    0.5300

    17.41

    +3.04%

  • SCS

    0.0200

    16.14

    +0.12%

  • RBGPF

    0.1000

    82.5

    +0.12%

  • CMSC

    0.1070

    23.692

    +0.45%

  • NGG

    0.3700

    88.76

    +0.42%

  • AZN

    5.3900

    193.4

    +2.79%

  • GSK

    -0.1900

    58.82

    -0.32%

  • VOD

    -0.2300

    15.25

    -1.51%

  • RELX

    -0.1900

    29.29

    -0.65%

  • BTI

    -0.9600

    60.19

    -1.59%

  • RIO

    0.3900

    97.24

    +0.4%

  • CMSD

    0.1100

    24.08

    +0.46%

  • BCE

    0.2100

    25.83

    +0.81%

  • BP

    -2.2500

    36.97

    -6.09%

  • JRI

    -0.0300

    12.78

    -0.23%

  • BCC

    0.7100

    89.73

    +0.79%

How tariffs in the EU work
How tariffs in the EU work / Photo: © AFP/File

How tariffs in the EU work

Customs duties, or tariffs, have become a political punching ball as the European Union prepares to respond to US President Donald Trump's recent offensive.

Text size:

But what exactly do we mean when we talk about tariffs? How does the EU policy work? Who pays them and what are they for?

Some answers:

- What are tariffs? -

Used by almost every country, tariffs are a tax on products imported from abroad.

They take many forms, the most common being a percentage of the economic value of the product -- the "ad valorem" duty.

The EU, like other economies, also uses so-called "specific" tariffs, such as an amount set per kilogramme or per litre of any given product.

Globally in 2022, the average tariff was 3.6 percent, according to the CCI-Cepii database (Centre for Prospective Studies and International Information).

In other words, each product crosses a border at a price 3.6 percent higher than its cost domestically.

"This average figure hides very strong differences between countries and sectors," Houssein Guimbard, a trade policies specialist at Cepii, told AFP.

- What are they for? -

The most immediate objective of these taxes is to give domestic producers a competitive advantage against foreign competition, said Guimbard.

Another goal, which is more the case in developing countries, is to supplement the government budget.

Some African or island countries, for example, finance more than 30 percent of their expenses this way, according to Guimbard.

Countries also use tariffs to maintain a positive trade balance and keep the amount of imports down by taxing them.

"It's a bit like President Trump's current logic," Guimbard told AFP.

- Who decides them in the EU? -

As a consequence of the customs union, the 27 member states have a common customs tariff for imported goods.

They do not apply any internal customs duties. The common customs tariff rates are set by the EU Council, based on proposals from the European Commission (EC).

They vary depending on agreements negotiated with trade partners and according to the "economic sensitivity of the products," the Commission says.

Typically, very low customs duties are applied to oil or liquefied gas "because consumers and companies need them, and the European Union does not necessarily produce them," said Guimbard.

Conversely, agriculture is highly protected: 40 to 60 percent protection on beef or dairy products, including all rights and quotas, compared to an average protection of 2.2 percent in the EU in 2022, according to Guimbard.

Since 2023, the EC has planned a "graduated response if our companies were victims of a significant increase in customs duties," Yann Ambach, head of the Tariff and Trade Policy Office at the Directorate General of French Customs, told AFP.

"It is within this framework that the countermeasures currently being considered by the EC would be implemented," Ambach said.

- Who pays them? -

In the EU, as a general rule, the importer, rather than the exporter, pays the customs duties.

If they increase, the main question is whether companies pass on the additional costs to the consumer.

"One must consider how important the product is for consumers and whether companies can raise the price of this product without reducing their margins," said Guimbard.

"The translation of the increase in customs duty also depends on the ability of companies to find alternative sources when importing, or alternative destinations when exporting."

- Who collects them? -

The member states are responsible for collecting customs duties.

They "must have adequate control infrastructure to ensure that their administrations, especially their customs authorities, carry out their tasks in an appropriate manner", according to the EC.

"The American measures and the subsequent European retaliatory measures correspond to an intensification of the missions of monitoring, verification, and control of imports and exports," said Ambach.

- Where do they go? -

For the period 2021-2027, the member states retain 25 percent of the collected customs duties.

"This measure not only covers collection costs but also serves as an incentive to ensure a diligent collection of the amounts due," the EC says.

The remaining 75 percent directly funds the EU budget. Tariffs on imported goods therefore account for approximately 14 percent of the community budget.

N.Wan--ThChM