Firms pause sales to US over tariff-related rules

The United States' new import tariffs are having unforeseen impacts on a wide range of enterprises and sectors, according to one of Europe's largest farm machinery companies.

Krone Agriculture, which is headquartered in Germany and has a workforce of 10,000 people, told The Guardian newspaper it has temporarily stopped exporting large pieces of farm machinery to the US because of little-known new tariffs on products that have steel components or steel derivatives.

Bernard Krone, the company's chairman, said the new tariffs, which were not mentioned in the deal the US struck with the European Union in July, have stalled the company's exports to the US, which was its second-largest market, worth $130 million a year.

Krone said the initial deal that calls for a blanket 15 percent tariff on EU exports was followed by the publication of a list of products deemed to include steel derivatives.

"That list was very alarming for us," he told The Guardian. "Nobody could tell us what to do. Did the tariffs depend on weight, origin, or the price of raw steel?"

The steel derivatives list comprises 407 items, including knitting needles, combine harvesters, barbecues, fridges, dishwashers, elevators, and wind turbines.

Companies wanting to export any of those items to the US now need to provide detailed paperwork that sets out the origin, weight, and value of their steel components. The US then uses the information to calculate how much tariff must be paid at the higher, 50 percent, rate.

Oliver Richtberg, head of foreign trade at the German engineering federation VDMA, said the form-filling is challenging, and many companies are unable to comply.

"You have to get paperwork from the supplier to the supplier to the supplier," he said. "That is pretty much impossible … (European Commission President Ursula) Von der Leyen speaks of stability, for our industry, that is 100 percent not true. The bureaucratic hurdles are so high that some companies have just stopped exporting to the US."

Krone said companies that manage to negotiate the paperwork and ship products to the US will pass their extra costs on to customers.

"If the farmers' prices go up, then at the end of the day it is the US citizen who goes into (the store) who has to pay more for their daily goods," he said.

The US and EU are preparing for a new round of negotiations on the next steps for their trade deal, with Washington eager to talk about the EU's new legislation around the digital and technology sectors, and its rules related to corporate compliance and climate-related regulations.

The EU wants to ensure it retains regulatory autonomy and hopes to negotiate a lower tariff on steel and aluminum and their derivatives, insiders told Bloomberg News.