USTR imposing 25% tariff on French cosmetics, etc.

The USTR has decided to impose a 25% tariff on imports from France as retaliation on the Digital Services Taxes that many EU nations are implementing against technology companies like Google, Facebook, and Amazon. Though the companies aren’t located in France, because they serve the population of France, the nation is implementing a 3% tax on their services. The U.S. has threatened to escalate the tariffs if the DSTs go into effect and for a while, early in 2020, both parties were holding off on the tariffs in favor of negotiation; sadly, that negotiation fell apart when U.S. Treasury Sec. Steve Mnuchin suspended international tax negotiations.

After an investigation by the USTR, it was determined that the DST discriminated against U.S. companies because it’s both retroactive and implemented on revenue and not income. Because of this determination, the USTR recommended up to a 100% tax on a list of products worth $2.4 billion; only 25% taxes were added on $1.3 billion with wine and cheeses left off the list. The current tariffs include cosmetics, soap, and handbags, but aren’t going into effect until January 1, 2021, so parties have a 180 negotiation period to work towards a mutually beneficial solution.

It bears repeating that beyond this issue with French imports the USTR is also investigating nine other E.U. nations that are considering adding Digital Services Taxes to their trade program, but products and levels of retaliation haven’t been released, so this will be a developing story that we will touch on more in the coming months to keep you updated and informed on the negotiations.

Below, you can find a full list of the 21 HTS numbers that are impacted by these tariffs, so you can investigate your cargo and determine if the products you import are implicated. If you have questions or comments and want to work to find new suppliers, new trade lanes, or just be ready to send comments on these products if the USTR opens a discussion, we encourage you to reach out to your Edward J. Zarach representative for more information and guidance.

Impacted HTS Numbers:

  • 3304.10.00 (lip makeup preparations)
  • 3304.20.00 (eye makeup preparations)
  • 3304.30.00  (manicure or pedicure preparations)
  • 3304.91.00 (beauty or makeup powders, whether or not compressed)
  • 3304.99.50 (beauty or makeup preparations and preparations for the care of the skin, excluding medicaments but including sunscreen or sun tan preparations, not elsewhere specified or included)
  • 3401.11.10 (castile soap in the form of bars, cakes, or molded pieces or shapes)
  • 3401.11.50 (soap, not elsewhere specified or included; 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 washing skin, in liquid or cream, containing 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, not elsewhere specified or included)
  • 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, not elsewhere specified or included, not over $20 each)
  • 4202.21.90 (handbags, with or without shoulder strap or without handle, with outer surface of leather, composition or patent leather, not elsewhere specified or included, over $20 each)
  • 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, not elsewhere specified or included)
  • 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 without shoulder strap or without handle, outer surface of vegetable fibers, excluding cotton, not of pile or tufted construction or braid)
  • 4202.22.70 (handbags with or without shoulder strap or without handle, with outer surface containing 85 percent or more of silk, not braided)
  • 4202.22.81 (handbags with or without shoulder strap or without handle, with outer surface of manmade fiber materials)
  • 4202.22.89 (handbags with or without shoulder strap or without handle, with outer surface of textile materials, not elsewhere specified or included)