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Tariff Increase on Imports from France to be Postponed, Reports Say

Thursday, January 23, 2020
Sandler, Travis & Rosenberg Trade Report

Press reports are citing French officials as saying the U.S. has agreed to postpone until at least the end of 2020 its imposition of higher tariffs in retaliation for a new French digital services tax. However, there has been no official confirmation as yet from the White House.

France is collecting a three percent tax on total annual revenues generated by some companies from providing certain digital interface services (e.g., e-marketplaces for goods and services) and Internet advertising services to, or aimed at, French users. Having concluded that this digital services tax discriminates against U.S. companies and is inconsistent with prevailing tax principles, the Office of the U.S. Trade Representative proposed in December additional tariffs of up to 100 percent on products from France that are drawn from a preliminary list covering products such as yogurt, butter, cheese, cosmetics, soap, handbags, and porcelain and china dinnerware.

However, U.S. and French officials meeting in Switzerland this week have reportedly agreed to a truce in which France will suspend its collection of the tax until the end of the year to give the Organization for Economic Cooperation and Development time to conclude an international agreement on digital taxes. In return, the U.S. has apparently agreed not to go ahead with the threatened tariff increase on imports from France during that time.

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