The United States Trade Representative (USTR) determined to postpone tariffs on imports of certain products originating in France derived from the digital services tax that that European country, in turn, set in 2019.

On Friday, the USTR published a notice announcing the determination to take measures in the form of additional 25% tariffs on products from France, but that it suspended this measure for a period of up to 180 days, until January 6, 2021. .

On December 6, 2019, the USTR deemed the French tax to be discriminatory and restrict U.S. trade.

France formally enacted a digital services tax on July 24, 2019, retroactively applied to digital services revenue as of January 1, 2019.

Tariffs and negotiations

In December 2019, in this case, the USTR issued a preliminary list of products from France, with an estimated import value in 2018 of $ 2.4 billion to impose additional tariffs of up to 100%. Among the goods listed are: champagne, cheeses, bags, soaps and fine dishes.

France’s digital services tax is a 3% tax on gross income derived from two digital activities of which French «users» are considered to play an important role in value creation: intermediary services and advertising-based services in user data.

At the end of last January, France suspended its tax for the rest of 2020 and agreed to continue working with the United States at the OECD to reach a compromise on international digital taxation.

The media reported that Section 301 tariffs will not be imposed on U.S. imports from France while countries work on the deal, but the USTR has not made any official announcement.

There are specific timelines for imposing tariffs under Section 301, but the exemptions provide flexibility, especially if the USTR determines that substantial progress is being made or that a delay is necessary or desirable to obtain a satisfactory solution to the problem.