The United States is reversing course on its decision to impose tariffs on French cosmetics, handbags and other imports, which are valued at $1.3 billion annually. The tariffs would have levied a 25 percent tax on French goods starting on Wednesday this week.
The planned tariffs were announced in July last year in retaliation to a digital services tax. A US Trade Representative’s office (USTR) investigation had found that a French digital services tax (DST) would have harmed U.S. tech firms such as Apple, Amazon, Facebook and Google.
“The US Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions,” the agency said in a statement.
Various countries impose a digital services tax to raise revenue from big tech firms’ local operations, which they say benefit from working in local markets without making any financial contributions to public coffers, Reuters reported.
The decision to suspend tariffs against France is likely to give the Biden administration a coordinated response to similar taxation schemes in countries such as Britain, India and Italy.
Several EU leaders and business associations welcomed the news. EU Trade Commissioner Valdis Dombrovskis said Brussels is keen to work on a global solution for fair taxation of the sector.
“Trade disputes between the United States and Europe … will only make losers, particularly during this time of crisis,” Dombrovskis said.