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U.S. suspends French tariffs over digital services tax

Christian Fernsby |
The United States on Thursday said it would hold off slapping tariffs on French cosmetics, handbags and other imports in retaliation for a digital services tax Washington says will harm U.S. tech firms, while it investigates similar taxes elsewhere.

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Topics: U.S.    FRENCH   

The U.S. Trade Representative’s office (USTR) said the 25% tariffs on imports of the French goods, which are valued at around $1.3 billion annually and were due to go into effect on Wednesday, would be suspended indefinitely.

USTR said suspending the action against France would allow Washington to pursue a coordinated response in 10 investigations into similar taxes in India, Italy, Britain and other countries. It gave no timeframe for further action.

European leaders and industry groups welcomed the news, saying it would allow more time for talks on a global taxation solution to bear fruit.

“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 ten other jurisdictions,” the agency said in a statement, adding it had not yet determined possible trade actions in the other cases.

French Finance Minister Bruno Le Maire said the tariffs would not have been “legitimate” under WTO rules in any case and redoubled his call for a global solution.

“Trade disputes between the United States and Europe ... will only make losers, particularly during this time of crisis,” he said.

EU Trade Commissioner Valdis Dombrovskis emphasized Brussels’s willingness to work on a global solution for fair taxation of the sector.

“The EU stands ready to explore all options should the U.S. unilaterally apply these trade measures,” he said.

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