U.S. Targets French Handbags and Cosmetics with 25% Tariffs in Retaliation for 3% Digital Services Tax

As Green reported last year, on December 6, 2019, the U.S. Trade Representative (USTR) announced a determination that France’s 3% Digital Services Tax (DST) was unreasonable and discriminatory, creating restrictive burden on U.S. commerce. After intensive Section 301 review, the United States has decided to take action in the form of additional duties of 25% on products of France.

Signed into law on July 24, 2019, France imposed a 3% DST on resident and non-resident digital companies providing advertising services, selling user data for advertising purposes, or performing intermediation services.

DST collection was suspended as both parties tried to work through differences with the Organization for Economic Co-operation and Development (OECD), however, with France beginning to issue collection notices for payments of the taxes due for 2020, the United States has retaliatory action targeting handbags and cosmetics.

The original list of French products subject to potential duties included 63 tariff subheadings at an approximate trade value of $2.4 billion, however, has since been mitigated to 21 HTS subheadings with a trade value of $1.3 billion.

France’s 3 percent DST covers transactions of U.S. companies with estimated revenues of approximately $15 billion in 2020, with expected collections of approximately $450 million in taxes from U.S. companies for activities during 2020, and over $500 million for activities during 2021.

USTR: Notice of Action in the Section 301 Investigation of France’s Digital Services Tax

LIST OF FRENCH PRODUCTS SUBJECT TO 25% DUTIES

1. 3304.10.00 – Lip make-up preparations
2. 3304.20.00 – Eye make-up preparations
3. 3304.30.00 – Manicure or pedicure preparations
4. 3304.91.00 – Beauty or make-up powders, whether or not compressed
5. 3304.99.50 – Beauty or make-up preparations & preparations for the care of skin, excl. medicaments but incl. sunscreen or sun tan preparations, nesoi
6. 3401.11.10 – Castile soap in the form of bars, cakes or molded pieces or shapes
7. 3401.11.50 – Soap, nesoi; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, not for toilet use
8. 3401.19.00 – Soap; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, not for toilet use
9. 3401.20.00 – Soap, not in the form of bars, cakes, molded pieces or shapes
10. 3401.30.10 – Organic surface-active products for wash skin, in liquid or cream form, contain any aromatic/mod aromatic surface-active agent, put up for retail
11. 3401.30.50 – Organic surface-active products and preparations for wash skin, in liquid or cream form, put up for retail sale, nesoi
12. 4202.21.30 – Handbags, with or without shoulder strap or without handle, with outer surface of reptile leather
13. 4202.21.60 – Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, nesoi, n/o $20 ea.
14. 4202.21.90 – Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, nesoi, over $20 ea.
15. 4202.22.15 – Handbags, with or without shoulder strap or without handle, with outer surface of sheeting of plastics
16. 4202.22.40 – Handbags, with or without shoulder strap or without handle, with outer surface of textile materials, wholly or in part of braid, nesoi
17. 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
18. 4202.22.60 – Handbags, with or without shoulder strap or without handle, outer surface of veg. fibers, exc. cotton, not of pile or tufted construction or braid
19. 4202.22.70 – Handbags, with or without shoulder strap or without handle, with outer surface containing 85% or more of silk, not braided
20. 4202.22.81 – Handbags, with or without shoulder strap or without handle, with outer surface of MMF materials
21. 4202.22.89 – Handbags, with or without shoulder strap or without handle, with outer surface of textile materials nesoi

DATES TO REMEMBER

July 10, 2020: The U.S. Trade Representative determined to take action in the form of additional duties of 25 percent on products of France specified.

January 6, 2021: The end of the 180-day suspension period for the additional duties.

As Green continues to monitor the situation, stay up-to-date on freight news by following us on Facebook, Twitter, and LinkedIn. For continuous updates, make sure to check out our website at greenworldwide.com.