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July 13, 2020
2020-1778

USTR announces delayed tariffs on French goods

The Office of the U.S. Trade Representative (USTR) July 10 announced duties of 25% on French products to counter the determination that France's Digital Services Tax (DST) is unreasonable or discriminatory and burdens or restricts US commerce, with the application of the additional duties suspended for a period of up to 180 days. The end of the 180-day suspension period is January 6, 2021. Products identified for the duties include make-up, soap and handbags.

The US previously proposed tariffs on French goods before agreeing with France to a cooling-off period as OECD-led negotiations among 137 countries continued to seek to develop a global solution that would avoid unilateral implementation of DSTs. Specifically, in January 2020, France suspended the collection of estimated payments for DST liability for 2020 until December to provide more time for OECD negotiations to continue, in exchange for the United States holding off on a proposed $2.4 billion in tariffs on quintessential French imports including wine, which was not included in the July 10 announcement.

The announcement — 12 months after USTR initiated the investigation under Section 301 of the Trade Act of 1974 of the DST of the Government of France — is of the imposition of ad valorem duties of 25% on French products, with an estimated trade value for calendar year 2019 of approximately $1.3 billion. USTR said the level of trade covered by the additional duties was determined in consideration of the value of digital transactions covered by France's DST and the amount of taxes assessed by France on US companies.

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