Bjørn Christian Lilletvedt Tovsen
Camilla Hammer Solheim
Axel Johnsen Holm
On 2 April 2025, the Trump administration marked "Liberation Day" by announcing implementation of new blanket tariff rates on all imports into the United States, with certain notable exemptions. This policy change is expected to significantly increase tariff costs for importers of goods to the U.S. and have extensive repercussions on global supply chains, contractual relationships, tax matters, and other related areas.
The blanket tariff imposes tariffs on goods that were previously exempt, creating a need for customs classification, determination of customs values, and extensive documentation requirements for a significantly larger number of products than under previous regulations.
A proper understanding of the new tariffs and their potential effects on business, in particular manufacturers and exporters of goods, is crucial to manoeuvre the implications of the tariffs and ensure competitiveness going forward.
Background
The announced tariffs are set on the assumption that bilateral trade deficits are inherently harmful and occur from a combination of tariff and non-tariff factors. Consequently, the tariffs have been set at the rate deemed necessary by the U.S. to balance bilateral trade relationships. The tariffs are thus named "reciprocal" (reciprocal tariff calculations).
The move is a step in President Trump's plan to ensure greater U.S. economic and manufacturing autonomy.
Legal framework
The new tariffs are blanket increases and do not alter the existing WTO based legal framework in relation to the rules of origin, customs classification and customs valuation etc. However, given the significant increases in tariff rates and their application to previously non-tariffed goods, it is now more important than ever to ensure the correct and optimized application of the legal framework. This is essential for both determining the correct tariff rate to be compliant and exploring different options within the supply chain to reduce tariff costs.
For instance, the rules of origin are criteria used to determine the country of origin of a product, which is key for applying country-differentiated tariffs. These criteria vary according to, amongst others, customs classifications and trade agreements. Some rules of origin require a certain percentage of the product's value to be added in the originating country, while others may require specific processes to be performed there for the product to qualify as originating from that country. Additionally, there are rules based on substantial transformation, meaning that a product is considered to have originated in the country where it has undergone significant changes in form, appearance, or nature. Moreover, exporters must be able to document the origin of their products in accordance with customs authority requirements.
The WTO's classification process also provides some flexibility when it comes to classifying products based on description, composition and use. This classification is crucial for determining the applicable tariffs and trade regulations.
The WTO also has rules on customs valuation designed to ensure that the value of imported goods is assessed fairly, reflecting the commercial reality. When a transactional value cannot be determined upon import, WTO regulations provide alternative methods for establishing customs value.
The common denominator for the WTO's rules of origin, customs valuation and classification is that they are somewhat discretionary and open for adaptations. Therefore, optimizing the application of these WTO rules is key.
Other effects
The new tariffs will also have other significant indirect effects on various matters, such as transfer pricing, and cause disputes over the allocation of tariff risk in existing contractual relationships. Handling these issues requires expertise in customs and tax legislation.
EU countermeasures
The EU Commission has announced countermeasures in response to the U.S. tariffs. These measures will be of significant importance for Norwegian exporters, as Norway risks being categorized as a third country towards both the EU and the U.S. The EU is Norway's number one trading partner, and increased tariff costs for imports to the EU would have a significant negative impact on the demand for Norwegian products. For example, Asia is selling low cost products to the U.S. Those sales would shift towards Europe due to the new U.S. tariffs. To protect its own industry, the E.U. may implement countermeasures similar to the U.S. tariffs. If so, Norway is as a starting point outside the EU Customs Union and would therefore be hit the EU tariffs with potential devastating impact on Norwegian exporters to the EU.
Recommendations for Norwegian manufacturers and exporters
The new tariffs do not fundamentally change the tariff system regulated by the WTO and associated trade agreements, but the announced U.S. blanket rates will significantly increase its scope and importance for a major part of the global supply chain for goods.
To address the new U.S. tariffs, we recommend collecting relevant data on product portfolios and conducting an analysis of options related to customs origin, classification and valuation. This will enable companies to explore tariff mitigation strategies and options in light of the aforementioned legal framework.
Do not hesitate to contact our customs experts to discuss the new tariffs and their potential impact on your business going forward.
