European firms exporting to the United States feel caught in the middle, facing an impossible choice: risk a catastrophic 200% penalty for a minor compliance error or deliberately overpay on tariffs to stay safe. This dilemma is the direct result of the US’s expanding and ambiguous rules on “derivative” steel products.
The policy requires exporters to declare the exact value of the steel and aluminum in their goods. For complex items sourced from global supply chains, this is often an impossible standard to meet. The slightest inaccuracy in this declaration could trigger the massive 200% fine.
Faced with this choice, many are opting for the lesser of two evils. As described by German MEP Bernd Lange, a motorcycle manufacturer unsure of its exact metal content chooses to declare a high figure of 50%. This means paying more in duties than is likely required, but it insures the company against the existential threat of the penalty.
This is not a sustainable situation. It puts European companies at a competitive disadvantage, forcing them to build in extra costs that their domestic US rivals do not face. It also punishes them for the normal complexities of modern manufacturing rather than any actual wrongdoing.
Being caught in this impossible situation is fueling deep resentment and frustration within the European business community. It has become a clear example of how trade policy can create perverse incentives and harm the very businesses it is supposed to regulate, leading to urgent calls for reform.