Denim made in the U.S. and going into Europe will have tariffs reduced from 1.5 percent to 0.45 percent.

Elise Shibles, a member of Sandler, Travis & Rosenberg (STR) customs and international trade law firm, explained that the retaliatory tariff on American jeans first came following the Byrd Amendment, which permitted U.S. industries to distribute duties from other countries as a result of anti-dumping and counterveiling measures (AD/CV). After the World Trade Organization (WTO) found in a dispute resolution case that the U.S. companies were being doubly compensated, they revoked the Byrd Amendment and let other countries raise tariffs up to the values of the distributed funds, which vary every year.

According to a report from STR, for fiscal year 2015, the U.S. Customs and Border Protection reported that $3.1 million in AD/CV duties on imports from EU member countries were distributed to U.S. producers. This is in comparison to distributions of $81.7 million in 2014, causing the retaliatory tax in 2015 to reach 1.5 percent.

In addition to the impact of distributed duties, STR also reported that the CBP indicated that $143,116 in AD/CV duties liquidated during fiscal year 2015 went uncollected, as well as $3.95 million in AD/CV duties filed with the entry prior to Oct. 1, 2007 that remain eligible. If these amounts are also made available for distribution, they could create a rise in EU retaliatory duties.

Shibles said, “Once the duties lowered to the 1 percent range, they had much less effect on the bottom line for U.S. denim brands exporting to the EU. If the U.S. Government has another banner year for closing long running AD/CV cases, which result in unusually high distributions, U.S. denim brands might again feel the impact.”

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