The U.S. will not impose tariffs as a result of the Section 301 investigation of France's Digital Services Tax (DST), according to a statement from the Office of the U.S. Trade Representative (USTR), handing the decision over the incoming Biden administration.
USTR notified of additional tariffs in July that were to have taken effect Jan. 6, but that date arrived with no formal action or announcement from USTR.
“The U.S. Trade Representative has decided to suspend the tariffs in light of the ongoing investigation of similar DSTs adopted or under consideration in ten other jurisdictions,” USTR said. While those investigations have “significantly progressed,” USTR said, they have “not yet reached a determination on possible trade actions.”
The matter now lands with the incoming Biden administration which has indicated that trade matters are going to be further down the list of their focal points as combatting the COVID pandemic and rebuilding the U.S. economy will take center stage. However, given the potential impacts such tariffs could have on services trade, this is a decision that could well be viewed as an economic matter which could elevate it as a focal point for the new administration.
France and other countries feel American companies are profiting enormously from local markets while making only limited contributions to public coffers. Paris has offered to withdraw the tax as soon as an OECD deal is reached, while other countries are looking at implementing their own DST. As noted, the USTR decision puts the responsibility of the tax disputes on the incoming Biden administration.
"America is going to have to respond," Sen. Ron Wyden, D-Ore., the next chairman of the Senate Finance Committee. "Many of these unilateral taxes have been designed to target American companies that are generating high-skill, high-wage jobs."