Navigating Tariffs, Geopolitical Shifts and Changing Business Landscapes

In light of the various developments and rapid shifts in US trade policies under the Trump presidency, navigating international trade and geopolitics are more challenging than ever before. The shift in policies have created turbulence in financial markets, with significant declines not seen since the Covid-19 pandemic, and with fear indexes hitting record heights. This turbulence has introduced substantial uncertainty and challenges across commercial, legal, and strategic domains, with businesses postponing investments and strategic decisions and some suffering significant losses.

Navigating Tariffs

Recent Tariff Developments

New reciprocal tariffs were introduced by the US on April 2, 2025, declared as “Liberation Day”, and amended on April 9, 2025, resulting in a general tariff of 10 % effective from 5 April 2025 and additional country specific tariffs effective from 9 July 2025 (including a 90-day suspension) for all countries except China to which special tariffs apply: Presidential Tariff Actions | United States Trade Representative. For Norway and the EU, the current reciprocal tariff is 10 % pending implementation of the country specific tariffs (Norway 5% and EU 10%) on July 9, 2025. It should be noted that the reciprocal tariffs are generally meant to be in addition to existing duties and that specific rates and exemptions for certain goods have been introduced as part of the reciprocal tariff framework. The Harmonized Tariff Schedule of the United States (HTSUS) should therefore be consulted to verify the tariff that apply to each specific product and origin. 

The reciprocal tariffs from the US have prompted countermeasures globally, including a general 125% tariff on US exports to China and various responses from the EU (the latter of which will be detailed further below). Additionally, negotiations between the US and other countries and trading blocs have already commenced, and further negotiations are likely to take place, during the 90-day suspension period. These negotiations will likely lead to adjustments to the reciprocal tariffs announced by the US, and additional countermeasures from other countries will depend on the outcomes of the negotiations.

Country of origin

With a wide range of country specific tariffs, the US authorities are expected to focus more on country of origin. Exporters of goods that originate from – or have been processed in – multiple countries should therefore be aware of the basic concepts for determining country of origin. Under the WTO rules, the country of origin is generally determined by where the product underwent its last "substantial transformation", i.e. the last processing/manufacturing step resulting in a new product or implying an important stage of production. Many WTO members primarily use the change in tariff classification or a qualitative “new product” test to decide if a substantial transformation occurred. This means i.a. that processes like storing, repacking, labelling and assembling goods into kits are not enough to change origin. The transformation must be meaningful in terms of the product’s tariff classification or its characteristics. A contributed value component may be sufficient, typically more than 50 %. It is also worth noting that the increased tariffs shall apply only to the non-U.S. content of a subject article, provided at least 20 percent of the value of the subject article is U.S. originating. It is therefore important for exporters to maintain thorough documentation of manufacturing processes and value addition to substantiate claims of substantial transformation and country of origin.

It should also be noted that attempts at changing the country of origin, e.g. by relocating production to another country, may not always be accepted by national authorities if the purpose of the relocation is solely to avoid tariffs. An example is Case C-297/23 P concerning Harley-Davidson's relocation of its motorcycle production from the US to Thailand due to customs duties imposed by the EU on US-origin motorcycles during Trump's last presidency. The Court of Justice of the EU found that the relocation's primary aim was to evade customs duties, which was unjustified under Article 33 of Regulation (EU) 2015/2446. Although the case concerns EU tariffs, it illustrates that efforts to bypass tariffs might not always be accepted by national authorities. Comparable situations could also arise in other jurisdictions, including the US, similar to the growing emphasis across several jurisdictions on preventing the circumvention of economic sanctions.

Tariff calculation

Under WTO rules, the customs value of imported goods is primarily based on the transaction value, which is defined as the price actually paid or payable for the goods when sold for export to the country of importation. This value must be adjusted to include certain cost elements. If the transaction value cannot be used, for example, in cases of insufficient documentation or non-arm’s-length pricing, the WTO rules provide a hierarchical set of alternative methods. 

Transfer pricing documentation prepared for tax purposes may be relevant for customs valuation, but such documentation may also be disregarded by the customs authorities: Despite many similarities there are significant differences between the methods in the WTO rules for determining the customs value and those of the OECD Transfer Pricing Guidelines. Related party importers must therefore be prepared to substantiate all elements of the customs value based on WTO principles.

EU Countermeasures

Following Trump's reciprocal tariffs, the EU has announced a series of countermeasures designed to defend European interests and protect businesses, workers, and consumers. In response to the US' imposition of a 25% tariff on steel and aluminium, the EU has revived actions against previous US tariffs imposed under President Trump's administration in June 2018 and January 2020. These tariffs, known as "Section 232" tariffs, targeted EU steel and aluminium exports, prompting the EU to introduce its own countermeasures. The newly imposed EU tariffs, which affect a total of €26 billion of EU exports, include:

• reinstating the June 2018 section 232 tariffs on various steel and aluminium products, as well as certain other products;
• increasing tariffs on steel and aluminium to 25%;
• extending tariffs to other products partially made of steel or aluminium.

In addition to the revival of countermeasures adopted in 2018 and 2020, the EU adopted further countermeasures on April 14, 2025, introducing a 25% tariff rate on certain US products such as textiles, food and beverages, wood and transportation equipment. The EU has also announced that it is preparing a broader set of response measures, though these have not yet been finally decided.

Following the 90-day tariff postponement by the US, the EU decided to pause its countermeasures for up to 90 days on April 14, 2025, in order to allow time and space for EU-US tariff negotiations. Therefore, the final scope of EU countermeasures remains to be seen, and the EU has underscored its commitment to mutually reduce EU-US trade barriers rather than escalating them.

Norway in a squeeze? 

In addition to countermeasures against the US, the EU may decide to impose further safeguard measures to protect its internal market, particularly if goods intended for the US market are dumped into the EU and thereby threatening EU businesses. This would be a notable concern for Norway as Norway is not part of the EU Customs Union. 

Under WTO rules, members normally cannot discriminate between trading partners due to the Most-Favoured-Nation (MFN) principle. Therefore, if the EU decides to implement safeguard measures alongside countermeasures against the US, such safeguard measures must generally apply to all countries unless exceptions under WTO rules are justified.

Article 10 of the EEA Agreement, however, generally prohibits EU/EEA countries from imposing tariffs on imports from other EU/EEA countries, although Articles 112 to 114 allow for safeguard measures in certain cases (the interpretation of which is somewhat unprecedented). Further, Article 120 asserts the precedence of the EEA Agreement over other treaties. Therefore, unless the exceptions for safeguard measures are met, the EEA Agreement asserts that the principle of free movement of goods shall prevail over WTO restrictions. Although this may be accurate from an EEA law perspective, the EU is still bound by WTO rules under which potential deviations from the MFN principle must be decided on a case-by-case basis taking into account, inter alia, the goods in question. It should also be noted that the EEA agreement does not apply to all products, e.g. certain agricultural goods and fish products, and that it does not apply to non-EU/EEA origin goods, such as US goods transiting through the EU/EEA. 

Against this background, potential safeguard measures from the EU raises complex legal questions under WTO law and its relationship with EEA law. Additionally, it raises political questions with respect to the willingness of the EU to exempt Norway from such measures. Ursula von der Leyen, President of the EU Commission, has stressed that "Norway is inside our single market and Norway will stay and remain inside our single market", which indeed suggests political willingness to exempt Norway from potential safeguard measures. Nevertheless, any exemption must comply with WTO requirements to avoid legal aftermaths under the WTO framework.

Contractual and Commercial Implications

Besides its impacts on the costs of imports and exports, recently imposed tariffs may affect existing contracts and supply chains. For instance, it may warrant supply chain restructurings and restructurings of corporate structures (e.g. through the establishment of subsidiaries), amendments to existing contractual clauses regarding price adjustments, cost allocation, documentation, liabilities and warranties, termination rights and/or force majeure, as well as other contractual, commercial and strategic considerations. Amid such contractual and commercial implications, businesses must be aware of various regulatory restrictions concerning cross-border trade, including sanctions, export controls, financial crime and human rights issues. The recently imposed tariffs also illustrate the need to include tailored clauses in future contracts to address the risks of changes in tariff regimes, as well as increased compliance risks. For example, the increased tariffs could incentivise smuggling, circumvention attempts, fraud, corruption, and other types of criminal activities, and such risks should be taken into account in relevant contracts.

Tariffs will also affect a vast variety of sectors and segments. For instance, in M&A processes, there will likely be an increased focus on Material Adverse Change (MAC) clauses, protections against warranty breaches between signing and closing (e.g. protection against termination of contracts with customers and suppliers), as well as 'new breach' insurances. Additionally, thorough financial and legal due diligence processes are likely to gain even more importance. 

What next?

There is not much disagreement, at least not outside the US, that several of Trump's Liberation Day tariffs violate WTO law. However, challenging these tariffs in the WTO will take time, and even if the tariffs are challenged, they will inevitably cause legal, commercial and strategic challenges for businesses. Additionally, the US has blocked appointments to the WTO Appellate Body since 2019, causing first instance decisions to be "appealed into the void". This is exactly what has happened to the case concerning Trump's tariffs on steel and aluminium from his last presidency. Additionally, the US is not part of the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) established by certain WTO members. Therefore, legal challenges to Trump's reciprocal tariffs are unlikely to provide relief or solutions for businesses in the near future.

Consequently, US tariffs will make the US a less attractive market for exporters across various sectors, although the final scope of US tariffs remains to be seen after the 90-day postponement period. For Norwegian exporters, markets like the EU will become even more appealing, as long as potential safeguard measures from the EU do not significantly affect Norway. The EU has also proactively identified areas in which investments are needed, such as outlined in the EU Commission's White Paper for European Defence Readiness 2030, which further boosts the EU's appeal as Norway's largest export market.

Aside from the EU, US tariffs may redirect exports and investments towards other countries with which Free Trade Agreements (FTAs) are in place, notably emerging economies. For example, the Trade and Economic Partnership Agreement signed in 2024 between EFTA countries and India includes objectives for EFTA states to increase foreign direct investment in India by 50 billion USD within 10 years and an additional 50 billion USD in the succeeding 5 years. Nevertheless, businesses should be aware that operating in such emerging markets may raise legal questions and warrant thorough risk assessments, e.g. because India is among the countries associated with elevated compliance risks, including corruption, human rights and sanctions circumvention risks. 

In this array of tariffs and geopolitical developments, experienced advisors are necessary to tackle legal challenges and provide strategic advise. Wikborg Rein has extensive experience advising clients on all aspects of restrictions to international trade. Our Tariff and Trade Restrictions team is ready to assist on any challenges related to trade restrictions, together with our experienced teams on Sanctions and Export Controls, Tax Law and State Aid and EU/EEA Law.