A massive “paper trail problem” is at the heart of the compliance crisis facing European firms under the US steel tariff regime. The demand to prove the exact origin and quantity of every metallic component in a product is an impossible task for many, leaving them vulnerable to catastrophic fines and forcing them into costly, defensive measures.
The issue was vividly illustrated by German MEP Bernd Lange, who described the predicament of a motorcycle factory. He explained that the owners were “unable to produce a definitive paper trail” for all the steel and aluminum used in their vehicles, right down to the nuts and bolts, which could contain elements of Chinese steel.
This inability to provide a perfect paper trail is not unique. Modern manufacturing relies on complex global supply chains, making it incredibly difficult to trace the ultimate origin of every low-value component. Yet, the US rules place the entire burden of proof on the exporter.
The penalty for failing to meet this impossibly high standard is a 200% tariff. Faced with this threat, the motorcycle factory chose to over-declare its metal content, paying more than necessary. “They declare 50% because otherwise they are in danger,” Lange explained.
This paper trail problem highlights a fundamental disconnect between the demands of the US trade policy and the reality of modern manufacturing. It has created a system where compliance is often not feasible, forcing businesses into a no-win situation and prompting calls for a complete overhaul of the unworkable rules.