USA suspends retaliatory tariffs on French handbags and cosmetics

Washington has suspended a plan to impose new tariffs on $1.3 billion in French products in a dispute over a digital services tax, the US Trade Representative (USTR) announced on Thursday.

USA suspends retaliatory tariffs on French handbags and cosmetics
The tariffs were in retaliation for France's plans to tax tech giants. Photo: AFP

The punitive levies were due to take effect on Wednesday, but USTR held off citing ongoing investigations of similar measures “adopted or under consideration in 10 other jurisdictions.”

The government of President Donald Trump in July 2020 announced the decision to impose 25 percent tariffs on French handbags and cosmetics, among other items, but suspended collecting the duties until January 6th.

That was in retaliation for the tax France approved in 2019 on tech firms like Facebook, Amazon, Apple and Google, which were accused of moving their profits offshore.

USTR Robert Lighthizer slammed the move saying it “unfairly targets US digital technology companies.”

Paris suspended collection of the digital services tax through the end of 2020, as the sides have been trying to a negotiate a deal through the Organization for Economic Co-operation and Development (OECD).

The aim is to find a common solution to address the policy dilemma of how to tax profits earned in one country by a company headquartered in another that offers more favorable tax treatment.

But the talks have not made much headway and were suspended due to the coronavirus pandemic. Meanwhile, more countries are considering following France's example.

USTR on Wednesday criticized similar digital services taxes on tech companies imposed by Italy, India and Turkey but imposed no tariffs.

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Zelensky to visit Paris on Wednesday evening

Ukraine's President Volodymyr Zelensky was expected in Paris on Wednesday evening, the French presidency said, after his visit to the United Kingdom.

Zelensky to visit Paris on Wednesday evening

EU officials are then hoping he will head to Brussels on Thursday to meet European leaders in a largely symbolic but nevertheless keenly anticipated visit after months of European support for Ukraine

France’s leader Emmanuel Macron will host his counterpart in the evening, the presidency said, without providing further details. German Chancellor Olaf Scholz is also expected to be in Paris to meet Zelensky with Macron, Scholz’s spokesman said.

Zelensky had travelled to the UK on Wednesday where he addressed the parliament.

His European trip is the first such visit since Russia invaded his country almost a year ago, on February 24th, 2022.

In December, the Ukrainian president received a hero’s welcome when he travelled to the United States, which has supplied the most military aid to Kyiv as a single country since the start of the war.