After decades of expanding globalisation, the world is shifting toward a more fragmented trade environment. Countries are increasingly taking steps to protect domestic industries and pursue strategic autonomy. Import tariffs, especially in the United States and the European Union, are now a key instrument in this movement. Global trade is evolving from interconnected networks to more compartmentalised economic blocs.
On 2 April, proclaimed “Liberation Day” by President Donald Trump, the United States announced a sweeping package of new tariffs on imported goods. These “reciprocal tariffs” are designed to counter what are seen as unfair duties imposed by other countries. In addition to the universal baseline 10% tariffs on all US imports, a wide range of goods are further affected, including metals, vehicles, and agricultural goods from countries such as China, South Korea, Brazil, India and countries within the EU.
In response, the European Commission prepared a set of countermeasures, including a 50% tariff on American whiskey. These were initially set to take effect on 1 April, but their implementation has now been postponed by two weeks. This delay gives time for member-state consultations and space for dialogue with the US.
The implications go far beyond increased import costs. Tariffs affect how multinational companies must approach transfer pricing, corporate taxation, VAT, and customs compliance.
Transfer pricing models that worked in a low-tariff world may no longer be useful. New cost structures may threaten profit margins and create losses, requiring additional transfer pricing adjustments. Changes in supply chains, such as the relocation of production operations, may require new policies and careful consideration of any exit tax considerations, as well as new tax registrations or permanent establishment risks. Taxpayers should ensure contemporaneous record keeping and evidencing of any policy changes made to mitigate the risks of potential challenges, as well as robust transfer pricing documentation for what is likely to be a period of heightened focus of tax authorities.
Import tariffs also raise the customs value of goods, which increases import VAT. Where goods are traded between group entities, prices must align with higher customs values, and misalignment can lead to disputes or double taxation.
Although recoverable in many jurisdictions, the VAT reclaim process is not always immediate or straightforward, potentially straining cash flow.
Meanwhile, customs obligations are becoming more demanding. Goods must be classified accurately, and origin documentation must be complete and timely to avoid fines or clearance delays.
In light of the aforementioned, businesses should assess their tax structures carefully to ensure they are not overburdened by tariff-related costs. Strategies such as shifting business operations to tax jurisdictions that have not yet been subject to tariffs, utilising deductions, and leveraging R&D tax incentives can help maintain profitability for your business.
The shift from globalisation to compartmentalisation calls for a proactive and integrated response. At Grant Thornton Netherlands, we help businesses navigate this new trade and tax reality with practical solutions and strategic guidance.
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Our tax, VAT, transfer pricing, and customs specialists work as one team, delivering coordinated and tailored advice to support your business in a rapidly changing environment. If you have any questions, please contact one of our specialists.
