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US tariff switch leaves importers puzzled in a complex new trade landscape

The US today replaced its temporary Section 122 import surcharge with a new Section 301 tariff regime, targeting imports from 60 economies. However, customs specialists say the biggest challenge will not be the headline duty rates - it will be understanding how the new measures interact with an already crowded web of existing tariffs. The new 'forced labour' Section 301 duties took effect at 12.01am Eastern Time, generally imposing tariffs of either 10% or 12.5%, depending on the exporting country, replacing the Section 122 tariffs, which expired overnight. While the new tariffs cover the vast majority of US imports, they are far from straightforward. Trade consultant Pete Mento said importers needed to look beyond the headline rates. "The thing people need to understand is not necessarily the rates but the interactions," he wrote on social media. Rather than introducing a single new layer of duties, the measures must be considered alongside existing China Section 301 tariffs; Section 232 tariffs on steel, aluminium, and automotive products; anti-dumping and countervailing duties; Section 338 actions; and country-specific most-favoured nation (MFN) rates. Perhaps most significantly, products already subject to Section 232 tariffs appear to have been carved-out of the new Section 301 measures, avoiding cumulative duties for those sectors. The new regime also introduces different treatment depending on product origin. Unlike most countries, exports from EU states and Taiwan are subject to a combined tariff of 10%, inclusive of any MFN duty already payable. Japan, South Korea, and Switzerland are treated similarly, with combined duties capped at 12.5%. In practice, products already liable for MFN duties at or above those thresholds incur no additional Section 301 tariff. The arrangement reflects last year's Turnberry Agreement between Washington and Brussels, under which the US agreed to cap tariffs on most EU goods at 15%. However, this has already prompted political criticism. "We had a deal with America and we have kept to that deal, that side of the deal. That's why it is a negative surprise that this agreement is not kept," EU foreign policy chief Kaja Kallas told Reuters during a meeting of ASEAN foreign ministers in the Philippines. The US administration has also published a lengthy list of exemptions, covering products including semiconductors, pharmaceuticals, civil aircraft, certain critical raw materials, humanitarian donations, informational materials, and goods already covered by Section 232 tariffs. Forwarders said the uncertainty was already generating questions from customers. Brazilian forwarder AGL Cargo's Jackson Campos said it was unclear whether Brazil's new 12.5% tariff would stack with an existing 25% duty on certain products, potentially creating a combined 37.5% surcharge. "Everybody is trying to understand how these measures will actually apply," he said. That uncertainty is expected to again increase demand for customs expertise, as importers need to review tariff classifications, country of origin, sourcing strategies, and routes before shipping cargo. However, despite the disruption, Christos Spyrou, founder and CEO of Neutral Air Partner, speaking on The Loadstar's News in Brief Podcast, believes the market will eventually adjust. "I think the market will adapt, as it always does," he said. "We've seen it over the years, particularly on one of the biggest markets in the world." But, he added: "The impact is more on the integrator, express, and B2C ecommerce sectors, where tariff regulations directly affect high-volume shipments - but also the consumer's decision," he said. He noted that B2B, however, had remained comparatively steady. "Businesses can adapt to tariffs, or anything else," he added. "But what the industry needs is stability. We need stability to be able to plan ahead, and we don't have that now."

APAC-Europe air cargo volumes drop 15% year on year

Air cargo volumes between Asia Pacific and Europe have dropped, with ex China volumes taking a hit and ex Hong Kong volumes continuing to decline. For Asia Pacific as a whole, volumes to Europe were down 10% week on week and 15% year on year, shows figures from WorldACD Market Data. Volumes from e-commerce hotspot Hong Kong were down 23% year on year, after four consecutive week on week declines, according to the week 28 (6-12 July) figures from WorldACD. The decline followed the end of the EU's de minimis exemption and its introduction of a temporary €3 customs duty on low-value parcels imported from outside the EU as of 1 July. This decline in volumes reflected "the impact of the removal by the EU of de minimis import tariff exemptions since 1 July", said WorldACD. EU member states agreed in December to introduce the customs duty charge per item on parcels valued below €150. This is intended to bridge the gap until the EU Customs Data Hub is launched in 2028. In addition to a drop in air cargo volumes from Hong Kong, air cargo volumes from e-commerce hub China were down 13% week on week and 15% year on year. Plus, volumes from Taiwan to Europe were down 24% week on week. WorldACD noted that in terms of week on week impact, typhoon Bavi "particularly affected capacity and chargeable weight from Taiwan and to a lesser extent volumes and capacity from China and other parts of East Asia".

French customs shake-up raises the bar rather than closing the door

Following France's abolition of Regime 42 for non-EU businesses, UK shippers and freight forwarders are increasingly turning to DAP (Delivered at Place) 42 terms to bypass challenges. The French Customs Procedure Code Regime 42 changes that took effect on 1 January have affected UK exporters that use France as their entry point into the EU, particularly on DDP (Delivered Duty-paid) shipments. UK exporters that ship DDP can no longer use a fiscal reps VAT number, and need to register for VAT themselves in France. Groupe BBL's head of UK, Gareth Godber, told The Loadstar: "The main challenges are obtaining a French VAT registration and then managing that VAT number monthly. Many businesses have faced redesigning how they export / import goods in fear of EU buyers purchasing goods elsewhere. "We have also seen companies changing the incoterms in which they export goods to the EU, from DDP to DAP, due to a lack of knowledge and potential solutions available." Groupe BBL's solutions centre around DDP Regime 40 and DAP Regime 42. Mr Godber said one of the key differences using Regime 40 meant only one VAT registration in France, allowing a UK company to sell in all EU 27 countries. On DAP Regime 42, he said: "We had to find a compliant and competitive way to service clients that didn't want their own French VAT registration, but still wanted all the benefits. This is where BBL went to market with DAP R42. "Instead of representing the UK exporter, we now represent the EU importer under DAP R42." This allows customers to still clear in France and benefit from no T1 documents or VAT outlay, a centralised clearance point in France and any duty/tax applicable billed back to UK. Davies Turner's head of sales and development southwest, Edward Lucy, told The Loadstar, "DAP Regime 42 has been pushed a lot, and the industry has picked up on it. DAP Regime 42 is the preferred method from the perspective of the shipper because it is cheaper, de-risks things and they don't have to get involved in VAT or be named on customs entries (they are still involved in the entry)." However, he emphasised that it was important to offer shippers options. Others include standard DAP, DDP Regime 40, and DDP VAT Forward. Mr Lucy said some of the companies most affected by the changes were the smaller ones. He added: "Bigger companies absorb and make things work. It is harder for the smaller companies as they have to get to grips with it and don't have enough time. It's a lot more complex than it sounds due to the accompanying risk." Meanwhile, Pawel Jarza, policy, compliance and external affairs director at BIFA, looked back to the regime changes in January and recalled: "This change was announced relatively late in the day, and it did cause a bit of confusion. We had more inquiries from members, and we tried to educate them as much as we could at that point." He noted that the market had appeared to settle down after a transition period. In his opinion, other customs authorities in the EU might look at their procedures, tying into the current EU customs reforms. "It depends on what the EU does with its customs reforms and how this changes the landscape. New solutions might appear and this particular regime may morph into something different, but this is long term." Elsewhere, Mr Godber believes that over the next three to five years, the DDP market will be characterised by factors including greater use of digital customs and VAT solutions, an increased confidence among EU customers buying from UK suppliers and a smaller number of providers offering DDP, but with higher levels of expertise and service quality. He added: "In many respects, the DDP Regime 42 changes are raising the bar rather than closing the door. Businesses that adapt early are well positioned to differentiate themselves, deepen customer relationships and capture opportunities as competitors retreat."