The U.S. Trade Representative (USTR) has announced additional 25% duties on certain French goods in response to France’s Digital Service Tax (DST), which discriminates against American companies. The goods cover 21 tariff subheadings with an estimated import value of $1.3 billion and include beauty products, soaps, and handbags.
According to the USTR, the additional duties will be suspended for 180 days to allow additional time for bilateral and multilateral discussions “that could lead to a satisfactory resolution of this matter.” However, the USTR has left open the possibility that the suspension period could be shortened to an earlier date depending on how the discussion go.
The duties are currently scheduled to take effect on January 6, 2021.
| HTSUS Subheading | Product Description |
| 3304.10.00 | Lip makeup preparations |
| 3304.20.00 | Eye makeup preparations |
| 3304.30.00 | Manicure or pedicure preparations |
| 3304.91.00 | Beauty or makeup powders, whether or not compressed |
| 3304.99.50 | Beauty or makeup preparations and preparations for the care of the skin, excluding medicaments but including sunscreen or suntan preparations, not elsewhere specified or included |
| 3401.11.10 | Castile soap in the form of bars, cakes, or molded pieces or shapes |
| 3401.11.50 | Soap, not elsewhere specified or included; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, for toilet use |
| 3401.19.00 | Soap; organic surface-active products used as soap, in bars, cakes, pieces; soap-impregnated paper, wadding, felt, not for toilet use |
| 3401.20.00 | Soap, not in the form of bars, cakes, molded pieces, or shapes |
| 3401.30.10 | Organic surface-active products for washing skin, in liquid or cream, containing any aromatic/mod aromatic surface-active agent, put up for retail |
| 3401.30.50 | Organic surface-active products and preparations for washing the skin, in liquid or cream form, put up for retail sale, not elsewhere specified or included |
| 4202.21.30 | Handbags, with or without shoulder strap or without handle, with outer surface of reptile leather |
| 4202.21.60 | Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, not elsewhere specified or included, not over $20 each |
| 4202.21.90 | Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, not elsewhere specified or included, over $20 each |
| 4202.22.15 | Handbags, with or without shoulder straps or without handle, with outer surface of sheeting of plastics |
| 4202.22.40 | Handbags with or without shoulder strap or without handle, with outer surface of textile materials, wholly or in part of braid, not elsewhere specified or included |
| 4202.22.45 | Handbags with or without shoulder strap or without handle, with outer surface of cotton, not of pile or tufted construction or braid |
| 4202.22.60 | Handbags with or without shoulder strap or without handle, outer surface of vegetable fibers, excluding cotton, not of pile or tufted construction or braid |
| 4202.22.70 | Handbags with or without shoulder strap or without handle, with outer surface containing 85 percent or more of silk, not braided |
| 4202.22.81 | Handbags with or without shoulder strap or without handle, with outer surface of manmade fiber materials |
| 4202.22.89 | Handbags with or without shoulder strap or without handle, with outer surface of textile materials, not elsewhere specified or included |
Click here to view the USTR’s Federal Register Notice published on July 16, 2020.
About France’s DST
Earlier this year, France enacted a 3% tax on annual revenues generated by companies which provide certain e-commerce goods and services and internet advertising services to, or aimed at, French users. The USTR determined that the DST discriminates against U.S. companies and is inconsistent with prevailing tax principles on account of its retroactivity (which is retroactive to January 1, 2019), its application to revenue other than income, its extraterritorial application, and its purpose to penalize certain U.S. technologies companies (particularly internet and software giants).
In response, the USTR had proposed additional tariffs of up to 100% on products covering 63 tariff subheadings from France, with an estimated import value of roughly $2.4 billion. After a public comment and review period, the USTR has decided to reduce the additional tariff to 25% and has cut the list of impacted goods down to 21 tariff subheadings with an import value of about $1.3 billion.
