USTR Proposes Tariffs on Imports from Six Countries in Response to Digital Services Taxes

Trade Update • MARCH 31, 2021

Last Friday, the Office of the United States Trade Representated published several draft Federal Register notices listing products from Austria, India, Italy, Spain, Turkey, and the United Kingdom that may be subject to additional 25% tariffs to offset digital services taxes recently implemented by these six countries.

The U.S. government contends that DSTs unfairly discriminate against U.S. companies in the digital space (e.g., Google, Facebook, Netflix, et al.), are inconsistent with principles of international taxation, and disproportionately burden American companies.

In a brief statement, USTR Katherine Tai said she was committed to working with other countries on the issue and hoped a resolution could be reached through ongoing talks in this regard among members of the Organisation for Economic Co-operation and Development.

The Trump administration’s initial Section 301 investigations involved ten countries, however, USTR also announced it was formally terminating cases against Brazil, the Czech Republic, Indonesia, and the European Union because these jurisdictions had considered but not yet moved to adopt any DSTs.

Note: USTR’s announcement did not address a separate Section 301 digital services action brought against France, covering $1.3 billion worth of French goods that was suspended last January by the previous administration.

Potential Impact

The Biden administration is proposing to impose additional tariffs of up to 25% percent on goods imported from the six countries in question that would yield aggregate additional duty revenue of $880 million.

Duties to be collected on each of these countries would be $45 million for Austria, $55 million for India, $140 million for Italy, $155 million for Spain, $160 million for Turkey, and $325 million for the UK.

Goods subject to these tariffs would be drawn from preliminary lists of products for each of the six countries. Targeted products include, among others:

  • Austria — Leather articles, textile products, ceramic articles, stemware, glassware, glass fibers, copper alloys, printed circuit assemblies, and various instruments;
  • India — Seafood, rice, bamboo articles, corks, cigarette paper, wool yarn, bras, pearls, precious stones, precious metal articles, and furniture;
  • Italy — Seafood, perfumery, travel and leather goods, apparel, footwear, spectacle lenses, and optical elements;
  • Spain — Seafood, handbags, belts, footwear, hats, and glassware;
  • Turkey — Textile floor coverings, bed linen, curtains, stone/ceramic articles, precious metal articles, and imitation jewelry;
  • United Kingdom — Personal care/cosmetic products, apparel, footwear, ceramic articles, precious metal articles, imitation jewelry, refrigeration equipment, industrial robots, furniture, and games.

Public Comments Invited

Regarding the six open cases, USTR has requested comments and information from interested parties on whether action is appropriate, and if so, the appropriate action to be taken. More specifically, USTR is seeking input concerning:

  • The level of the burden or restriction on U.S. commerce resulting from the country at issue’s DST.
  • The appropriate aggregate level of trade to be covered by additional duties.
  • The specific products to be subject to increased duties, including whether USTR’s proposed lists should be retained or removed, or whether tariff subheadings not currently on the list should be added.
  • The level of the increase, if any, in the rate of duty on items covered.

Written comments must be received by no later than April 30, 2021. Documents must be submitted via the USTR’s electronic comments portal and should be placed under the appropriate docket number for each country.

Next Steps

USTR will hold virtual public hearings during the first week of May regarding the proposed remedy for each of the six subject countries, as well as a “multi-jurisdictional” hearing on May 3 for issues concerning more than one country. Requests to appear at each hearing (including a summary of the testimony to be given) must be submitted to USTR by no later than April 21, 2021.

Need More Information?

Should you have any questions about the potential impact of the proposed tariffs on your imports or require any assistance preparing a comment submission, don’t hesitate to contact one of our knowledgeable trade experts.

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