Date: 12th November, 2020

What do the following have in common: tomato ketchup, orange juice, cheddar cheese, tobacco, pinball, sweet potatoes and tractors?

These are a few of the US-produced products now facing a 25% price hike following a new retaliatory move by the European Union (EU) in an ongoing dispute with the USA over subsidies paid to aircraft manufacturers Boeing and Airbus.

The US imposed tariffs on EU products such as wine, cheese and whisky last year following approval from the World Trade Organisation (WTO) resulting from financial support for European aircraft manufacturer Airbus.

Soon after the WTO also approved similar action by the EU against various US products for similar subsidies paid to Boeing. The list of affected products is supposed to only encompass those goods imported from the USA which are also readily available from alternate countries.

The intention of the new regulations
The intention of the new regulations

Since cheese, sweet potatoes and orange juice can be source from European countries, they fell foul of the new rules which impose a 25% import tariff on these goods if they come from the USA.

The announcement of the new import tariffs
The announcement of the new import tariffs

However, arcade pinball machines and video games along with their component parts also fall under the regulations, resulting in a 25% price increase for all machines and parts which arrived at EU customs clearance points on or after 10th November 2020 (the day after the new ruling was published).

The product code which includes pinball - 95 04 30 10
The product code which includes pinball – 95 04 30 10

This new import tariff is in addition to the standard sales tax, Value Added Tax (VAT), which varies by country from 17% in Luxembourg to 28% in Hungary, averaging around 20%.

The rules apply to all twenty-seven EU member states as well as the UK. The UK formally left the EU on 1st January 2020 but as part of the Withdrawal Agreement they will implement any regulatory agreements approved by the EU until the end of 2020.

The UK's agreement to follow EU regulations until the end of 2020
The UK’s agreement to follow EU regulations until the end of 2020

Once the UK leaves the EU on 1st January it will be free to enter into alternative trade arrangements with the US and other countries, so it is hoped this 25% tariff will be dropped by the UK then, although the final arrangements could result in the status quo being maintained for some time yet.

Despite post-Brexit trade details not having been agreed, several prominent pinball machine and parts suppliers in the country are delaying purchases from the US until the start of 2021 in the expectation the tariff will cease at that point.

For the other twenty-seven countries who remain in the EU, the 25% import tariff looks likely to remain in place until agreement can be reached between the EU and the US. New pinball machine prices are already significantly higher in the EU than in the US due to a combination of currency exchange rates, shipping costs and VAT, but this 25% price increase is sure to impact on new machine sales in the important run-up to the holiday season.

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