As of Thursday, May 7, 2015
Europe has slightly increased a retaliatory tariff that it imposes on women’s blue jeans imported from the United States.
As of May 1, the additional tariff, which is added to the already 12 percent tariff on U.S. denim pants, went from 0.35 percent to 1.5 percent. That makes the total EU tariff on women’s blue jeans imported from the United States rise to 13.5 percent, compared with 12.35 percent last year.
“This is not going to hit anybody’s pocket in a big way,” said Elise Shibles, an attorney in San Francisco with the international trade law firm Sandler, Travis & Rosenberg.
The 1.5 percent retaliatory tax is a pit-tance compared to 26 percent additional tariff imposed on U.S. women’s denim pants on May 1, 2013.
The extra 26 percent tariff was part of a trade dispute that centered around the Byrd
Amendment, by which the United States collected extra duties several years ago on EU- made items that were considered to be unfairly traded goods that affected U.S. manufacturers. Even though the Byrd Amendment was rescinded, the United States continued distributing the money collected under the Byrd Amendment, to which the EU objected.
Because of this, the World Trade Organization authorized the EU to increase tariffs on certain U.S. items for a one-year period, with the option to renew the tariff—either increasing it or decreasing it.
Because the United States reduced by nearly 50 percent the distribution of Byrd Amendment duties, the EU decided in 2014 to reduce the extra denim tariff, which was costing some Los Angeles denim makers as much as $250,000 during a six-month period.
To combat the added tariff, several denim makers hired Sandler, Travis & Rosenberg to find a technical way to get around the new tax.
Attorney Elise Shibles filed a legal challenge with the tax and customs department in the United Kingdom about how women’s denim pants were classified. She won a ruling that said women’s denim pants could be classified as women’s cotton pants if their dye is not colorfast, which is considered a denim quality.
Because the U.K. is part of the European Union, other EU countries have been honor- ing the new classification.
Shibles said U.S. denim makers continue to classify their blue jeans as cotton pants if the dye is not colorfast to avoid any unexpected tariff increases.
“Duty rates fluctuate every year,” she said. “You don’t know what is going to happen.”