US Trade Representative’s Office Suspends Tariffs On French Goods

The U.S. is doing away with a program to levy tariffs on $1.3 billion of French goods as retaliation for that country’s revenue tax on Big Tech companies, Bloomberg reported.

Many of the companies affected by France’s tax were American, and the idea to get rid of the tariffs will de-escalate tensions just as President Donald Trump plans to leave office on Jan. 20. The 25 percent tariffs were set to go into effect at midnight on Wednesday (Jan. 6) and would have hit items like soap, handbags and makeup, Bloomberg reported.

“The U.S. Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in 10 other jurisdictions,” the Office of the U.S. Trade Representative (USTR) said in a statement Thursday, referring to digital services taxes. “A suspension of the tariff action in the France DST investigation will promote a coordinated response in all of the ongoing DST investigations.”

French Finance Minister Bruno Le Maire said the country has taken note of the U.S.’s decision.

“We believe these sanctions are illegitimate under WTO law,” he said, according to Bloomberg. “Once again, we call for a comprehensive settlement of the trade disputes between the U.S. and Europe, in which everyone loses, especially in this time of crisis.”

There is currently a global dispute regarding how tech companies like Amazon or Facebook should be taxed. Countries have considered whether to ring-fence companies, how to dole out profits and how strict the rules should be, Bloomberg reported.

Some countries have gone ahead with digital taxes on Big Tech, PYMNTS reported, including Indonesia, which has been levying a 10 percent value added tax (VAT) on digital products and services from some companies.

In addition, the European Union has faced pressure to impose the taxes even without a U.S. agreement, with competition commissioner Margrethe Vestager saying the EU should be ready to act alone if it has to.