New Section 301 Tariffs on France in Response to Digital Services Tax Averted

Tariffs on French champagne, cheeses, handbags and other products (see 2001060040) will not be coming, several news outlets are reporting, since France has agreed not to impose a Digital Services Tax in 2020 as negotiations continue at the Organization for Economic Co-Operation and Development on a fair way to impose income taxes on companies such as Google and Amazon.

Agence France-Presse reported that the President Donald Trump and French President Emmanuel Macron, in a phone call on Jan. 20, agreed to give OECD negotiations a chance and not spark a trade war.

Macron tweeted, “Great discussion with @realDonaldTrump on digital tax. We will work together on a good agreement to avoid tariff escalation.” Trump then quoted that tweet with the comment: “Excellent!”

The French wire service quoted a French diplomatic source, and the Wall Street Journal quoted an unnamed American official who confirmed the truce, and said that France buckled under pressure from the tariff threat. France will not impose the DST in 2020, the WSJ reported.

The official White House readout of the Macron call said, “The two leaders agreed it is important to complete successful negotiations on the digital services tax.” The Office of the U.S. Trade Representative did not respond to a question about the proposed Section 301 tariffs on France.

Kevin Rapp, co-owner of a wine importing business called Rapp Wine, said the good news in a way is bad news for wine importers. While it spares importers of French champagne, he's worried it will lead those importers to “pump their brakes a little bit” in their lobbying against other wine tariffs in the current Airbus list, or in the proposed list.

Rapp imports Italian wine, which is not on the first round of Airbus tariffs, but is on the proposed list when the USTR changes targets.

He said he's talked to many wine importers, and one told him he didn't even get the 15 days' grace period from his customs broker to pay the duties this fall, because the broker said, “My bank account is maxed out.”

Rapp said he wishes all wine importers would join forces with cheese importers, seafood importers, prosciutto importers -- all the goods hit by Airbus tariffs.

“It's not just about wine. It's so many other industries,” he said.