On Thursday, July 16, 2020, the United States Trade Representative (USTR) announced in the Federal Register Notice 85, No. 137 FR 43292, that effective January 6, 2021, the United States will impose a 25 percent tariff on $1.3 billion of imports from France. The 21 items affected include cosmetics, soaps and handbags as specified in the notice and at the bottom of this trade alert.

This action is being taken following an investigation into France’s Digital Services Tax (DST) that began in July 2019. France’s 3 percent DST covers transactions of U.S. companies with estimated revenues of approximately $15 billion in 2020. Collections in taxes from U.S. companies is expected to be approximately $450 million for activities during 2020 and over $500 million for activities during 2021.

Following the investigation which included public comment and testimony, the USTR released its report in December 2019. The investigation by the USTR determined that France’s DST is unreasonable or discriminatory and burdens or restricts U.S. commerce, and therefore is actionable under Section 301 of the Trade Act.

The USTR has chosen to delay implementation for 180 days pursuant to section 305 of the Trade Act in order to allow time for bilateral and multilateral discussions that could lead to a satisfactory resolution of this matter.

List of Harmonized Tariff Schedule numbers and their descriptions:

3304.10.00 – Lip make-up preparations
3304.20.00 – Eye make-up preparations
3304.30.00 – Manicure or pedicure preparations
3304.91.00 – Beauty or make-up powders, whether or not compressed
3304.99.50 – Beauty or make-up preparations & preparations for the care of the skin, excl. medicaments but incl. sunscreen or sun tan preparations, nesoi
3401.11.10 – Castile soap in the form of bars, cakes or molded pieces or shapes
3401.11.50 – Soap, nesoi; organic surface-active products used as soap, in bars, cakes, pieces, soap-impregnated paper, wadding, felt, for toilet use
3401.19.00 – Soap; organic surface-active products used as soap, in bars, cakes, pieces; soap impregnated paper, wadding, felt, not for toilet use
3401.20.00 – Soap, not in the form of bars, cakes, molded pieces or shapes
3401.30.10 – Organic surface-active products for wash skin, in liquid or cream, contain any aromatic/mod aromatic surface-active agent, put up for retail
3401.30.50 – Organic surface-active products and preparations for washing the skin, in liquid or cream form, put up for retail sale, nesoi
4202.21.30 – Handbags, with or without shoulder strap or without handle, with outer surface of reptile leather
4202.21.60 – Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, nesoi, n/o $20 ea.
4202.21.90 – Handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, nesoi, over $20 ea.
4202.22.15 – Handbags, with or without shoulder straps or without handle, with outer surface of sheeting of plastics
4202.22.40 – Handbags with or without shoulder strap or without handle, with outer surface of textile materials, wholly or in part of braid, nesoi
4202.22.45 – Handbags with or without shoulder strap or without handle, with outer surface of cotton, not of pile or tufted construction or braid
4202.22.60 – Handbags with or w/o shoulder strap or w/o handle, outer surface of veg. fibers, exc. cotton, not of pile or tufted construction or braid
4202.22.70 – Handbags with or w/o shoulder strap or w/o handle, with outer surface containing 85% or more of silk, not braided
4202.22.81 – Handbags with or without shoulder strap or without handle, with outer surface of MMF materials
4202.22.89 – Handbags with or without shoulder strap or without handle, with outer surface of textile materials nesoi

The USTR noted that they will continue to monitor the effect of the trade actions and the progress of discussions with France and may adopt appropriate modifications.

For more information, please contact your local Noatum Logistics USA representative.