United States suspends French tariffs over digital services tax

The United States has indefinitely suspended 25% tariffs on French cosmetics, handbags and other imports it had planned in retaliation for a digital services tax Washington says will harm U.S. tech firms, as it investigates similar taxes elsewhere.

The U.S. Trade Representative's office (USTR) said on Thursday that the 25% tariffs on imports of the French goods, which are valued at around $1.3 billion annually, would be suspended indefinitely.

Washington announced the tariffs in July after concluding a French digital services tax would harm firms such as Google, Facebook, Apple and Amazon.

The USTR said suspending the action against France, which had been due to come into force on Jan. 6, will allow it to pursue a coordinated response in 10 investigations involving other countries, including India, Italy, Britain and Turkey.

“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 USTR said in a statement.

“Those investigations have significantly progressed, but have not yet reached a determination on possible trade actions,“ it said, adding its aim to achieve a “coordinated response in all of the ongoing DST investigations.“

The USTR said on Wednesday that it had concluded digital services taxes adopted by India, Italy and Turkey also discriminate against U.S. companies and are inconsistent with international tax principles, paving the day for potential retaliatory tariffs.

But it held off on announcing any specific tariff actions and said it would continue to evaluate all available options.

The probes are among several still open USTR Section 301 investigations that could lead to tariffs before President Donald Trump leaves office or early in the administration of incoming President-elect Joe Biden.

(Reporting by Andrea Shalal; Editing by Alexander Smith)