U.S. Imposes 25% Tariffs on $1.3 Billion of French Goods

On July 10, 2020, the United States Trade Representative (USTR) announced a 25% tariff on $1.3 billion worth of French products, including handbags, cosmetics and soaps, in retaliation for a digital services tax on U.S. technology companies. However, USTR decided to suspend application of the additional tariffs for up to 180 days pending further discussions with France.

Last year, USTR concluded that France’s digital services tax was unreasonable, discriminatory and a burden on U.S. commerce. It also proposed a list of $2.4 billion worth of French goods that could be hit with retaliatory duties as high as 100%, referenced here. The final retaliatory list leaves off certain product categories including champagne, cheese and tableware.

U.S. trade officials said the final retaliation figure reflects the value of U.S. digital transactions covered by France’s 3% digital services tax (estimated to be around $15 billion per year) and the amount of taxes that France is expected to collect from U.S. companies. USTR believes the French tax is structured to unfairly target large U.S. internet companies like Facebook, Google and Amazon.

USTR will continue to monitor the effects of the trade action and the progress made toward resolution of this matter. If appropriate, USTR may publish a notice of proposed modification and will consider comments received in response to the notice.

Read the published USTR notice. For more information, please contact a BDO Customs and International Trade Services professional.
 

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