Dr Anna Jerzewska, founder of Trade & Borders
International trade is changing, and the EU, like every other major economy, is grappling with how to respond to shifting dynamics and growing tensions. Customs policy is changing as well leading to less flexibility and stricter rules.
The EU’s long-standing position as the defender of rules-based trade is becoming difficult to sustain. US tariffs have caused trade diversion and impacted global supply chains. Chinese overcapacity in sectors like steel, chemicals and electric vehicles continues to grow, leading to economic security concerns. The challenges of the multilateral trading system under the WTO and its Appellate Body continue to weaken the multilateral trading system.
The EU has a broad toolbox at its disposal to address these challenges, from anti-dumping and countervailing duties and safeguards to the Foreign Subsidies Regulation and the Anti-Coercion Instrument, which has not yet been used. Existing tools are being strengthened, as the new steel regime shows, and new ones are under discussion. New industrial policies are emerging, such as the “Made in Europe” requirements in the proposed Industrial Accelerator Act.[1] The debate on an EU equivalent of the US Section 301 or a “red button” has gathered pace, and in October 2026 France and Germany called for a rapid-response instrument against market-distorting practices and overcapacity.[2] With the number of trade defence investigations increasing in the EU, what is the role of customs and border checks in ensuring the EU’s trade policy goals are implemented?
Similar to trade, international customs rules were developed over time, often under different circumstances and have adapted to changing circumstances. One recent example is the removal of the de minimis threshold for e-commerce. This trade facilitation measure was introduced to save the time and cost of clearing parcels of negligible value. Over time, e-commerce volumes grew to the point where EU customs authorities felt the exemption distorted the level playing field. The threshold was removed in July 2026.
Customs, or at least some of its elements, can act as a non-tariff barrier. While not a trade defence measure itself, it can be used in a way that reflects and supports some of the trade defence goals. And in a way, over the last couple of years, we have been observing how interpretation of customs rules is changing to follow the wider EU’s trade policy. Implementation and interpretation of customs rules by national customs authorities and EU courts is becoming more and more strict. It’s a steady but undeniable trend.
When Supply Chain Decisions Become Duty Avoidance
One now quite famous example is the Harley-Davidson Europe and Neovia Logistics Services International case related to non-preferential rules of origin.[3] Non-preferential rules are what trade defence measures use to decide which country the product comes from and whether additional taxes are due.
Article 60(2) of the Union Customs Code requires a product to undergo substantial “economically justified” transformation to be considered originating. This was defined as not bypassing EU tariffs and trade defence measures.[4] But when is a supply chain decision considered to bypass EU trade defence measures?
Harley-Davidson moved production of motorcycles destined for the EU market to Thailand after the EU imposed additional duties on US motorcycles in 2018. There was no doubt that the motorcycles were substantially transformed in Thailand. Nonetheless, the Court considered the transformation not “economically justified” because it viewed the move to Thailand as an attempt to avoid duties.
Companies shape their supply chains to maximise profits, take advantage of cheaper factors of production and of facilitations such as free trade agreements, and minimise their tax bill, including a range of direct and indirect taxes. This highly controversial ruling restricted companies’ ability to do so if it coincides with additional tariffs or non-tariff barriers being imposed.
Last week, a new ruling came out which, while not final, is highly relevant. On 7 October 2026, the General Court ruled on the classification of electric bicycle parts imported in separate consignments.[5] Under the international classification rules, goods imported unassembled or disassembled are usually classified as the final product, provided they have its essential character. Based on earlier case law, this was understood to cover goods imported together (simultaneously) or on the same day.[6] An earlier case confirmed that goods do not need to be covered by the same customs declaration. This time the court has confirmed that goods can be classified as the final product even when the components are imported over several months or even years. Simultaneous presentation is only one factor, but goods need to be classified based on the totality of evidence and objective characteristics. What’s important in this case is that customs authorities can use a wide range of sources to attempt to establish a link between shipments, here commercial invoices by verifying commercial information such as invoices.
Electric bicycles from China have been subject to anti-dumping and countervailing duties since January 2019.[7] As are electric vehicles, which have faced countervailing duties since 2024.[8] The duties on finished products are therefore high. In most cases, duties on parts are much lower. Importing components and putting the product together in the EU was one of the ways companies could lower their tax bill. This was a widespread practice and one that is within the international customs rules. At what point does a tax optimisation strategy become avoidance of trade policy measures? Can companies no longer modify their supply chains to minimise costs without this being viewed as fraud? With this ruling, the line becomes even more blurred.
The ruling is also far from an incidental or isolated practice. The European Public Prosecutor’s Office (EPPO) Annual Report 2025 highlighted imports of bicycles subject to antidumping duties as one of the areas of customs fraud.[9] False declarations of origin and misclassification of goods via staggered imports were cited as ways to evade trade defence measures.
Looking Ahead: Stricter Rules and the EU Customs Reform
These two cases show that interpretation of customs rules is getting stricter when it comes to determining what constitutes non-compliance and fraud. And this comes at a time when customs, trade and sustainability are more interlinked than ever.
Most new sustainability policies have a customs/border element. The “Made in Europe” requirements of the Industrial Accelerator Act refer to non-preferential rules. From 1 October 2026, the EU’s new steel measures include a requirement to prove the country of “melt and pour”, where the steel was first melted and cast into a solid form. This can be done by providing an additional document, normally a mill test certificate. The melt and pour requirement is not currently part of EU non-preferential rules for steel products. The current rules are less restrictive. Yet, it is expected that it might play a larger role going forward. From next year, data regarding the country of melt and pour can be taken into account when allocating quotas. It may also be incorporated in CBAM requirements and perhaps even be included in the updated EU non-preferential rules.
The direction of travel is clear. Customs is cracking down on non-compliance while simultaneously tightening the definitions and leaving less room for interpretation. It reflects the EU’s wider trade policy. And there is much more to come. The EU customs legislation is undergoing a fundamental change. A new Customs Code has been introduced, and the secondary legislation is being drafted. This reform is not about trade facilitation but about centralisation and better data. As part of this legislative shift, we’re likely to see an update to non-preferential rules of origin used for trade defence. While there is some hope that they will be simpler than the current ones, they are also very likely to be far less flexible. Part of the new Customs Code is also the establishment of the EU Customs Authority. One of its functions will be to ensure a more centralised and harmonised interpretation of customs rules across member states. The new IT system, the Data Hub, will allow the customs authorities across the EU to have much better access to information related to commercial transactions for all goods entering the EU. Supply chains will become more visible, and any changes in sourcing and customs strategy will be much more easily detected.
For companies, that means that any shift in supply chains will need to be well justified. The developments in customs policy, including the latest EU customs reform and court rulings, need to be viewed as an integral part of the EU’s trade policy, and companies will need to understand that context before making any decisions.
[1] Commission proposal for an Industrial Accelerator Act, COM(2026) 100, 4 March 2026.
[2] Joint letter from President Macron and Chancellor Merz to Commission President von der Leyen, 5 October 2026.
[3] Case C-297/23 P, Harley-Davidson Europe and Neovia Logistics Services International v Commission, judgment of 21 November 2024, upholding Case T-324/21.
[4] Article 60(2) of Regulation (EU) No 952/2013 and Article 33 of Commission Delegated Regulation (EU) 2015/2446.
[5] Case T-529/25, Prestige Rijwielen and Others, judgment of the General Court of 7 October 2026.
[6] See, for example, Case C-107/22, X v Inspecteur van de Belastingdienst Douane, judgment of 27 April 2023, ECLI:EU:C:2023:346.
[7] Commission Implementing Regulations (EU) 2019/73 (anti-dumping) and (EU) 2019/72 (countervailing) of 17 January 2019.
[8] Commission Implementing Regulation (EU) 2024/2754 of 29 October 2024 on battery electric vehicles from China.
[9] The European Public Prosecutor’s Office (EPPO) Annual Report 2025, p. 63.