The China Mail - How tariffs in the EU work

USD -
AED 3.672497
AFN 69.999824
ALL 84.350005
AMD 383.819595
ANG 1.789699
AOA 916.999626
ARS 1371.512118
AUD 1.553215
AWG 1.8025
AZN 1.703721
BAM 1.708921
BBD 2.018218
BDT 122.195767
BGN 1.713402
BHD 0.377023
BIF 2942.5
BMD 1
BND 1.297101
BOB 6.907097
BRL 5.599897
BSD 0.999672
BTN 87.54407
BWP 13.649927
BYN 3.271194
BYR 19600
BZD 2.00782
CAD 1.385325
CDF 2890.000119
CHF 0.81342
CLF 0.024812
CLP 973.379545
CNY 7.20045
CNH 7.215245
COP 4186.71
CRC 505.122436
CUC 1
CUP 26.5
CVE 95.949786
CZK 21.52195
DJF 177.72007
DKK 6.53716
DOP 60.999632
DZD 130.924652
EGP 48.57532
ERN 15
ETB 138.197463
EUR 0.87579
FJD 2.271803
FKP 0.753407
GBP 0.757535
GEL 2.70093
GGP 0.753407
GHS 10.502932
GIP 0.753407
GMD 72.505525
GNF 8674.999949
GTQ 7.676882
GYD 209.126455
HKD 7.849925
HNL 26.350227
HRK 6.600697
HTG 131.169313
HUF 350.282046
IDR 16481.25
ILS 3.392025
IMP 0.753407
INR 87.623851
IQD 1310
IRR 42112.510995
ISK 124.529709
JEP 0.753407
JMD 159.943729
JOD 0.709047
JPY 150.687501
KES 129.502406
KGS 87.450282
KHR 4015.00011
KMF 431.497487
KPW 899.943686
KRW 1398.930138
KWD 0.306151
KYD 0.832958
KZT 539.837043
LAK 21580.000268
LBP 89550.000235
LKR 302.068634
LRD 200.999622
LSL 18.009872
LTL 2.95274
LVL 0.60489
LYD 5.414977
MAD 9.104002
MDL 17.212259
MGA 4430.00011
MKD 53.918885
MMK 2099.176207
MNT 3589.345014
MOP 8.082308
MRU 39.819728
MUR 46.650251
MVR 15.390753
MWK 1736.512585
MXN 18.876198
MYR 4.277499
MZN 63.960487
NAD 18.009593
NGN 1530.450049
NIO 36.750084
NOK 10.33181
NPR 140.070338
NZD 1.699745
OMR 0.384502
PAB 0.999585
PEN 3.568984
PGK 4.13025
PHP 58.3145
PKR 283.249737
PLN 3.745258
PYG 7486.402062
QAR 3.64075
RON 4.443988
RSD 102.596018
RUB 81.102213
RWF 1440
SAR 3.751238
SBD 8.244163
SCR 14.145032
SDG 600.49551
SEK 9.79465
SGD 1.298035
SHP 0.785843
SLE 22.999699
SLL 20969.503947
SOS 571.496651
SRD 36.815498
STD 20697.981008
STN 21.925
SVC 8.746368
SYP 13001.531245
SZL 18.010081
THB 32.798011
TJS 9.425981
TMT 3.51
TND 2.879709
TOP 2.342102
TRY 40.667005
TTD 6.786518
TWD 29.949009
TZS 2570.000301
UAH 41.696586
UGX 3583.302388
UYU 40.0886
UZS 12604.999807
VES 123.721575
VND 26211
VUV 119.302744
WST 2.758516
XAF 573.151008
XAG 0.027315
XAU 0.000304
XCD 2.70255
XCG 1.80154
XDR 0.69341
XOF 566.508796
XPF 104.925036
YER 240.65047
ZAR 18.215055
ZMK 9001.205074
ZMW 22.965115
ZWL 321.999592
  • RBGPF

    0.5200

    74.94

    +0.69%

  • CMSC

    0.2500

    22.85

    +1.09%

  • SCS

    0.0000

    10.33

    0%

  • JRI

    0.0200

    13.13

    +0.15%

  • SCU

    0.0000

    12.72

    0%

  • BCC

    -1.0800

    83.81

    -1.29%

  • GSK

    -1.8200

    37.15

    -4.9%

  • NGG

    0.2000

    70.39

    +0.28%

  • RIO

    0.2800

    59.77

    +0.47%

  • RYCEF

    1.0800

    14.18

    +7.62%

  • RELX

    0.1100

    51.89

    +0.21%

  • BCE

    -0.2000

    23.33

    -0.86%

  • CMSD

    0.2100

    23.27

    +0.9%

  • VOD

    -0.2500

    10.81

    -2.31%

  • BP

    -0.1000

    32.15

    -0.31%

  • AZN

    -3.5000

    73.09

    -4.79%

  • BTI

    0.5200

    53.68

    +0.97%

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