Bilateral trade between the U.S. and the European Union has been a longstanding phenomenon. According to the U.S. Census Bureau, the EU is one of the U.S.’s biggest trading partners — with $823 billion of goods traded in 2022.
By definition, exports are goods or services produced in one country and sold in another, while imports are goods and services not produced domestically. The World Trade Organization identifies the U.S. as the world’s largest importer, followed by the EU and China, which has been the largest exporter of goods since 2009, Statista data shows. The U.S. ranks third in exports, behind China and the EU.
Exports to the EU totaled nearly $319 billion. Meanwhile, imports from the EU amounted to $504 billion, making the trade deficit $186 billion, U.S. Census Bureau data found. In simple terms, the U.S. receives more imported trade goods than it exports to the EU.
Why Are U.S. Imports So Difficult to Maintain for E-Commerce in Europe?
The COVID-19 pandemic, prolonged inflationary pressures, political unrest, new international regulations, and complicated logistics have created numerous trade challenges for retailers and e-commerce companies based in the U.S.
In my experience as the CEO and co-founder of Go Global Ecommerce, it is generally easier to import goods into Europe than the U.S. The U.S. has more restrictions on products and policy regulations, though every country has its own specifications, standards, and means of trading. Let’s discuss the various items that can complicate the trading process.
Factors Complicating the Importing of Goods From the U.S. to the EU
The first factor complicating international e-commerce is the state of overall economic conditions. We know that economies can change daily. Add in possible recessions, changing regulations, and political unrest, and you have a case of complicated trade. A complication or change in one country — or at one level of the business landscape — can create a domino effect on trade worldwide.
When it comes to the economic outlook, nearly 90% of supply chain leaders surveyed for a Container LogTech report said they fear “inflation and recession will be the biggest factors that will impact businesses” this year. Of course, negatively impacted businesses will negatively affect trade.
Furthermore, trade regulations differ for every industry, product, business, and sector. When it comes to customs, a free trade agreement or coalition is typically in place. A free trade agreement, such as the North American Free Trade Agreement (NAFTA), is a pact that eliminates many barriers and tariffs between countries, making it easier to import and export goods.
However, some types of goods have custom duties, such as aluminum, alcohol, and steel. A customs duty is a tariff or tax on specific goods the owner, purchaser, or customs broker must pay. These are handled by governments and regulators. International regulations and logistics complicate the process of importing goods from the U.S. for sale within the EU. For example, U.K. e-commerce fulfillmentis especially trickier post-Brexit.
Geography is another factor that can affect trade. For example, as a country equipped with big boats and high-tech shipping machinery, it is easier to trade goods in the Netherlands. Trade routes, shipping requirements, and warehousing needs can impact shipping and trade in countries that don’t have the necessary ports, stations, or equipment for handling a large influx of imports.
In sum, factors that impact trade include the type of product, economic conditions, geography, and political agreements. Fortunately, goverments and regulators can help facilitate trade flow, improve accessibility for U.S. imports, and boost the overall network of e-commerce in Europe.
Business Moves to Make for Effective Cross-Border E-Commerce
Smooth implementation of cross-border e-commerce solutions requires regulations and political agreements. Yet government and agencies aside, there are ways to expand your company’s e-commerce business across borders as well.
E-commerce in Europe is on the rise as companies like Shopify, Zalando, and the Otto Group expand, and startups like Klarna and Flink continue to pop up on the market. There is a massive demand for e-commerce in the European market. To keep up with these changing tides, consider the following tips to expand your business’s cross-border e-commerce abilities.
Analyze the best route for your business.
Every country has pros and cons, regulations, and laws. First, determine which country has the best tax considerations and payments process for your business. Perhaps localizing your efforts in Europe instead of the U.S. would prove most beneficial. Ask yourself whether the location has a strong presence of business partners, market maturity, and your business’s target customers.
Then, determine whether you want to expand physically to other countries. Your company could benefit by opening a warehouse in the EU. This move can help you save time and money on shipping and efficiency costs.
Establishing warehouses abroad can also ease transportation concerns, saving you the headache of mapping out the best shipping routes.
Invest in the experts.
Compliance is crucial. To ensure your business is set up for success from the start, invest in a legal department or a company with international expertise. Whether you hire in-house or outsource advice, these shipping experts can provide you with e-commerce regulations guidance and help you ensure your business displays all necessary legal information to customers.
Nowadays, more businesses are choosing the merchant of record model to stay compliant when selling internationally. International e-commerce experts can also guarantee that you abide by all trade duties, tax regulations, and laws no matter where your customers are located.
Put your customers above profit.
A strong and impressive customer experience is what keeps your customers continuously choosing your company. Find ways to simplify your return and exchange policy, but note how the cost of customs and duties will work when a product needs to be returned. Analyze the potential costs of returns and exchanges, but don’t make the customer bear the brunt of the transaction.
Cross-border e-commerce brings companies international market opportunities. It can be challenging for companies to keep up when faced with ever-changing trade regulations and agreements. Fortunately, by following these three strategies, you can expand your business internationally today. The opportunity and demand are ongoing, and the potential for e-commerce in Europe is continuous.
Simone De Ruosi is the CEO and co-founder of Go Global Ecommerce. With a background in engineering and business and sound knowledge of productive system management and strategic business management, he recently completed his MBA at the ESCP Business School (placed at No. 6 in the FT Global MBA 2022 rankings). When he co-founded and launched Go Global Ecommerce in 2020, he set out to assist brands that were ambitious about expanding on a global scale — an objective that has been fulfilled, having helped brands such as Nestlé, Kraft Heinz, Smeg, The Ridge, and Blauer USA grow internationally. He is a Mensa member, a keen sportsman, and, above all, a family man.
