U.S. Proposes New Tariffs Of Up To 100% On French Products

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The U.S. government has proposed the imposition of 100 percent tariffs on up to $2.4 billion of imported French goods, including champagne, cheese, yogurt and handbags, after it concluded that France's Digital Services Tax or DST discriminates against U.S. tech companies.

The announcement of the plan comes amid renewed worries about global trade tensions after U.S. President Donald Trump announced plans to reinstate tariffs on metal imports from Brazil and Argentina.

The Office of the U.S. Trade Representative or USTR said its investigation under section 301 of the Trade Act of 1974 concluded that France's DST discriminated against U.S. companies and is inconsistent with prevailing principles of international tax policy.

Specifically, the USTR's investigation found that the French DST discriminated against companies such as Google, Apple, Facebook, and Amazon.

The DST imposes a 3 percent levy on gross revenues generated by U.S. technology companies from providing digital interface services and targeted advertising services in France.

"USTR's decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies. Indeed, USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey," U.S. Trade Representative Robert Lighthizer said.

The list of French products that are subject to potential duties includes 63 tariff subheadings with an approximate trade value of $2.4 billion. The list includes sparkling wine, beauty products, cheese, yogurt, handbags, and bone china household table and kitchenware.

The USTR said it is seeking public comments on the option of imposing fees or restrictions on French services. The U.S. trade agency will hold a public hearing on January 7, 2020 regarding the proposed action to be taken in this investigation.

Public comments on the proposed action must be submitted by January 6, 2020, and post-hearing rebuttal comments must be submitted by January 14, 2020.

Meanwhile, the U.S. technology sector said it welcomed the result of the USTR's investigation of France's DST, but hoped a settlement would be reached.

"Once again, we respectfully urge the United States, France, and all participating governments to focus on a successful and lasting tax policy resolution at the OECD," said Jennifer McCloskey, Vice President of Policy at the Information Technology Industry Council or ITI.

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