The US Suspends Proposed Tariffs on French Products

The U.S. Trade Representative's Office (USTR) on Thursday announced that the United States has decided to suspend proposed tariffs on about US$1.3 billion worth of French products amid a dispute over digital service taxes (DSTs).

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The additional 25-percent tariffs on certain French products were announced in July 2020 in response to France's DST that impacts major U.S. technology companies and were scheduled to go into effect on Wednesday.

"The USTR has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions. Those investigations have significantly progressed, but have not yet reached a determination on possible trade actions," the USTR's Office said.

"A suspension of the tariff action in the France DST investigation will promote a coordinated response in all of the ongoing DST investigations,"  it added.

The move came after the U.S. on Wednesday claimed that DSTs adopted by India, Italy, and Turkey discriminate against U.S. companies without taking any tariff actions.

"USTR is not taking any specific actions in connection with the findings at this time but will continue to evaluate all available options," the USTR Office said.

In June 2020, the United States initiated Section 301 investigations into DSTs considered by 10 U.S. trading partners, including the European Union, Brazil, and India. This section allows the U.S. president to unilaterally impose tariffs or other trade restrictions on foreign countries.

The global trading community has become increasingly concerned that the U.S. government's frequent use of Section 301 would go against the World Trade Organization rules, undermine the multilateral trading system, and disrupt the global supply chain.