Textile industry hopes to amend agreement with the US and lower tariffs above 15%

This Monday, the United States’ 15% tariffs on the European Union come into force, and the textile and clothing sector feels ‘lost’. Despite the agreement reached, products that previously paid a lower tariff than the one currently in force will now pay 15%, while items that previously paid higher tariffs will continue to do so. The industry hopes to reach an agreement with the Trump administration to lower tariffs on products above 15%.

‘Products that paid less than 15% will all now pay 15%, and products that already paid rates above 15% will continue to pay what they were paying,’ Ana Dinis, director-general of the Portuguese Textile Association (ATP), explains, noting that this is also the interpretation of Euratex, the European association representing the sector.

The ATP spokesperson notes that negotiations ‘with the US are proving to be a difficult process’ and explains that ‘today they say one thing and tomorrow they say another’. However, Ana Dinis stresses that ‘negotiations are still ongoing and that at any moment, for better or for worse, the sector may have news’.

The president of the National Association of Clothing and Apparel Industries (Anivec) admits ECO that the ‘sector feels lost’. ‘Only when customers start sending orders to the US will we know what rate will be applied, because today we still don’t know for sure what the amount will be,’ César Araújo laments in statements sent to ECO.

However, the leader of Anivec and owner of Calvelex says that ‘there are several interpretations’ and that it is still ‘not certain that products that paid tariffs of more than 15% will pay more or remain the same’.

The director general of ATP warns that the imposition of reciprocal tariffs on a wide range of countries will lead to a ‘diversion of traffic’, giving the example that ‘Asian suppliers, who have a large presence in the US, will find it more difficult to export to the North American market and will end up flooding Europe, the main market for Portuguese exports,’ she says.

‘If it is more difficult for the Asian market to place its products in the United States, they will place them in Europe,’ notes Ana Dinis. This opinion is shared by the leader of Anivec, who believes that ‘countries that are unable to export to the US will turn their attention to Europe.’ César Araújo states that ‘the European market will have to rethink the way it relates to third countries,’ emphasising that ‘Europe cannot be used and abused’ by these countries.

‘Europe cannot absorb the amount of goods that third countries export to the European market,’ says the president of Anivec, emphasising that the way forward is to “regulate”, as the US is doing. He recalls that ‘last year, 4.6 billion low-value orders entered Europe without any control’ from Asian countries.

‘We may not like the path and the formula, but Trump has put on the table what politicians have been kicking down the road for years and are now faced with a situation where they will have to act,’ says César Araújo.

Finally, César Araújo regrets that ‘Europe is only committed to saving the automotive sector’. ‘We want the same commitment and treatment for the textile and clothing sector,’ says the Anivec leader.

In 2024, Portugal exported €435 million worth of textile and clothing products to the United States, with the North American market accounting for 8% of the sector’s total exports, according to ATP data sent to ECO.

The agreement between Brussels and Washington

After intense negotiations, European Commission President Ursula von der Leyen and US President Donald Trump reached an agreement on tariffs to be applied to exports between the two countries. However, the joint statement took a long time to finalise and was only released on 21 August.

The reciprocal tariff agreement provides for a single, comprehensive ceiling of 15% for the vast majority of products that the United States purchases from the European Union, including strategic sectors such as automobiles, pharmaceuticals, semiconductors and timber, which already includes the United States’ Most Favoured Nation (MFN) tariff. In other words, when the current US MFN is equal to or higher than 15%, only the MFN rate will continue to apply. This means that when the MFN rate is higher than 15%, no additional reciprocal tariff will be added.

In a question and answer document, the EU executive gives three specific examples. In the case of a European machine to which a US MFN tariff of 4% applies, prior to the political agreement, the overall tariff for that machine would be 14%, as it would include the universal tariffs of 10% plus the MFN tariff of 4%. Now, with the agreement, the machine will be subject to an all-inclusive tariff of 15%. The same applies to some Portuguese textiles.

In another case, a bicycle with an American MFN of 11% plus the reciprocal tariff tax of 10% would have a total tariff of 21%. Under the new rules, the tariff applied will be 15%. In the case of a heavy truck exported by the European Union to which the US applies a US MFN tariff of 25%, the general tariff of 25% will remain in place without any additional increase, but without benefiting from the 15%.

The joint statement also stipulated that the United States undertakes to apply only the MFN tariff, i.e. zero or close to zero, to the following products from the European Union: unavailable natural resources (including cork), all aircraft and aircraft parts, generic pharmaceuticals and their ingredients, and chemical precursors.

Last week, there were new developments in the process, with the European Commission presenting two proposals to ensure the application of the 15% tariff ceiling agreed by the US for EU cars and car parts: the exemption of tariffs on US industrial products and preferential market access for a variety of seafood and agricultural products.