While the Office of the U.S. Trade Representative (USTR) was set to impose additional import duties of 25 percent starting January 6, 2021, these retaliatory tariffs have now been further suspended according to a press release. These additional tariffs on certain products from France are in response to that country’s continued collection of a Digital Services Tax (DST) that a USTR investigation determined discriminated against U.S. companies. The USTR published a comprehensive report on France’s DST on December 2, 2019, and announced that the tax is “unreasonable or discriminatory and burdens or restricts U.S. commerce” pursuant to Section 301 of the Trade Act of 1974. For additional background on the investigation and USTR’s decision to implement the additional tariffs, see Update of July 13, 2020.

While determining that the additional tariffs were necessary, the USTR in July 2020 suspended application of the duties for 180 days to allow for continued negotiations with France. Those negotiations have stalled, however, and the effort so far of the Organization for Economic Cooperation and Development (OECD) to negotiate an agreement for a new international tax structure that would supersede the need for digital services taxes has also been unsuccessful. USTR has now stated that the tariffs will be further delayed “in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions.” Those investigations remain ongoing, and the suspension of the tariff action against France “will promote a coordinated response in all of the ongoing DST investigations.”

If eventually applied, the additional 25 percent duties will be applied to products covered by 21 Harmonized Tariff Schedule (HTS) subheadings, including: Chapter 33 (Essential oils and resinoids; perfumery, cosmetic or toilet preparations); Chapter 34 (Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modeling pastes, “dental waxes” and dental preparations with a basis of plaster); and Chapter 42 (Articles of leather, saddlery and harness, travel goods, handbags and similar containers, and articles of animal gut (other than silkworm gut).

The full list of French products that would be covered by the 25 percent tariff is available at Annex A to USTR’s Federal Register notice of July 16, 2020.