Customs duties: 2,000 French companies particularly exposed

Some 2,000 companies that account for half of French exports to the United States are exposed to the American market for 10% or more of their turnover, according to a study by French customs on Friday, July 25.

With 48.6 billion euros of goods exported to the United States in 2024, the majority of which will be by 14,700 companies in the commercial sectors (excluding agricultural and financial goods), the country is France's second largest export destination in value behind Germany (78 billion euros).

While the outcome of the negotiations on customs duties between the European Union (EU) and the United States is expected on August 1, discussions are continuing and an agreement seemed to be emerging in recent days with American customs duties reduced to 15% , with exemptions in the aeronautics and pharmaceutical sectors. Temporarily, a customs duty of 10% applies to European exports to the United States.

Half of the additional customs duties could affect around 2,000 French companies that account for three-quarters of exports of transport equipment (aeronautical and naval construction), beverages and leather goods to the United States, the study indicates.

The ability of these companies to withstand the shock of this new customs situation lies in particular in the margin rates: a high rate can be reduced by a company in order to "retain its customers" or to "absorb all or part of the increase in customs duties for its customers by lowering its prices" , adds the document.

The margin rate for companies exporting to the American market will average 35.5% in 2024, compared to 27.9% for companies in France in 2022, with contrasting situations depending on size or sector of activity. Thus, a quarter of these companies have a margin rate below 11%, and a quarter above 52.1%, the study notes.

If companies try to fully offset the price increase by reducing their margins, they would have to reduce them by 0.6 percentage points with 10% tariffs, and by almost 2 percentage points with 30% tariffs.

Given the exposure to the US market and the companies' margin rates, the situation would be "more difficult for the transport equipment manufacturing industries (aeronautics and shipbuilding)" and "for microenterprises and independent companies" , the authors estimate.