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US Suspends French Tariffs over Counter Digital Services Tax

U.S 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, according to Reuters report on Friday.

France and other countries view digital service taxes as a way to raise revenue from the local operations of big tech companies which they say profit enormously from local markets while making only limited contributions to public coffers.

In Washington, U.S. Trade Representative reported that 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.

On other hand, European leaders and industry groups welcomed the news, saying it would allow more time for talks on a global taxation solution to bear fruit. In contrast, French Finance Minister Bruno Le Maire explained that the tariffs would not have been legitimate” under WTO rules in any case and calling for a global solution.

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

In addition, CSI President Christine Bliss also urged France and other countries named in the USTR investigation to suspend imposition of DSTs and continue working toward a solution. Noteworthy, the probes are among several active USTR probes that could lead to tariffs before President Donald Trump leaves office or early in the Biden administration.