US to set $1.3b tariffs on French goods

The 25% levy will be delayed 180 days and take effect in January 2021

The Trump administration has said it will impose new tariffs on $1.3 billion worth of French goods, including cosmetics, soap and handbags, in retaliation for a French tax that largely hits American technology companies, escalating a trade dispute that threatens to further damage the global economy.

Notably absent from the tariff list, published by the US Trade Representative, are French cheese, sparkling beverages and cookware, which the administration had threatened to tax in December. Retailers and other US importers of French goods had voiced opposition to those potential tariffs, saying they would hurt American companies and their workers.

The 25 per cent tariffs will be delayed 180 days and take effect in January 2021, a hiatus meant to give both countries time to resolve their differences over a digital tax that will hit American tech companies.

Tech tax

France has adopted a 3 per cent tax on the revenues some companies earn from providing goods and services to French users over the internet, even if they do not have large physical presences in France, a measure that

will target Facebook, Google, Amazon and others whose businesses focus on digital advertising and e-commerce.

The Trump administration launched a trade investigation into the tax a year ago. The report found in December that the French tax “discriminates against US companies, is inconsistent with prevailing principles of international tax policy and is unusually burdensome for affected US companies.” The report recommended tariffs as high as 100 per cent on certain French imports valued at $2.4 billion, including cheese and handbags. The final recommendation was significantly less punitive, with tariffs at 25 per cent, and some beverages and cheese were dropped from the list.