U.S. suspends certain French tariffs

Reuters has reported that the United States says it will suspend certain tariffs on French cosmetics, handbags, and other imports in retaliation of a digital services tax Washington says will harm U.S. tech firms. The U.S. Trade Representative’s Office said the 25 parent tariffs on French imports, valued at 1.3 billion dollars, will be suspended indefinitely.

In July, Washington announced the tariffs after a U.S. investigation proved a French digital services tax singled out u.S. companies including Google, Facebook, Amazon, and Apple. France considers digital service taxes as a way to raise revenue from local operations of major tech companies which profit from local markets, but contribute very little in terms of tax revenue.

The Trade Representative’s Office suspended the tax to pursue investigation into similar taxes in other countries including India, Italy, and Britain. Many government officials believe that these investigations would actually beneficial in terms of creating a more global taxation solution.

Bruno Le Maire, France’s Finance Minister, said that the tariffs would have been illegitimate under World Trade Organization Rules and also called for a more global taxation solution. With a new U.S. presidential administration coming into power in just a few weeks, trade agreements around the globe could be under review. After the recent Senate election and Democrats now having both chambers of Congress, including the House of Representatives and the U.S. Senate, President-elect Joe Biden is expected to be able to move forward with a new economic agenda.

Over 140 countries wanted to continue talks for a more global taxation solution back in October, but the U.S. was reluctant to move full speed ahead with any plans in the wake of a presidential election cycle. The tax issue is just one of many economic issues the Biden administration is expected to handle when they take office this month.

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