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U.S. suspends retaliatory tariffs on French imports

US has taken a pause its trade dispute with France in particular and EU as a whole

The United States (U.S.) has announced to put on hold the imposition of tariffs on French cosmetics, handbags and other imports, which were earlier meant to be imposed in retaliation to Digital Services Tax (DST) from Thursday, January 8, 2020.

Tariffs of 25% on French goods worth approximately U.S. $ 1.3 billion annually, were announced in July 2020, after a U.S. investigation revealed that DST unfairly singled out U.S. tech firms such as Google, Facebook, Apple and Amazon.

USTR said suspending the action against France would allow Washington to pursue a coordinated response in 10 investigations into similar taxes in India, Italy, Britain and other countries. It gave no timeframe for further action.

France and other countries view DST as a medium of raising revenue from the local operations of big tech companies. France believes that these U.S. based tech companies make huge profits in France and make limited contribution to their country.

European nations have welcomed the move by the U.S. and said it would allow more time for talks on global taxation solution to be fruitful.

Speaking on the occasion, the Minister of Finance & Economy of France – Bruno Le Maire said, “Trade disputes between the United States and Europe … will only make losers, particularly during this time of crisis.”

He also emphasised that imposing tariffs would not have been legitimate under the World Trade Organisations (WTO’s) rules and called upon for the defining of a global tax solution.

Taking it to twitter, the Executive President of European Commission – Valdis Dombrovskis, “We take note of the US decision to postpone its unilateral trade measures against France relating to its Digital Service Tax. We stand ready to engage with the US to find a solution. However, all such issues should be resolved at @wto.”

He further tweeted, “The EU stands ready to explore all options should the US unilaterally apply these trade measures. More broadly, we are willing to work constructively with the US on finding a timely global solution to the fair taxation of the digital sector. @USTradeRep @OECDtax.”

Meanwhile, the Brussels has expressed willingness to work on a global solution for fair taxation of the sector. The E.U. is ready to explore all options if U.S. unilaterally apply these trade measures.

The Coalition of Services (CSI) Industries in U.S., an agency which represents the interests of the dynamic American service economy as urged France and other countries to suspend the imposition of DST.

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