New Tariffs Coming on Imports from China, EU, France, Brazil, Argentina
Wednesday, December 04, 2019
Sandler, Travis & Rosenberg Trade Report
The Trump administration has announced plans to impose tariff increases on imports of various goods from the European Union and France as well as steel and aluminum products from Brazil and Argentina. It also appears increasingly likely that the tariff increase on List 4B goods from China will take effect Dec. 15 as scheduled.
The U.S. imposed additional tariffs of 25 percent on more than 150 goods imported from EU countries, as well as an additional 10 percent tariff on new aircraft from France, Germany, Spain, and the United Kingdom, effective Oct. 18 due to the EU’s failure to fully comply with a World Trade Organization ruling against subsidies it provided to aircraft manufacturer Airbus (click here for more information on affected products).
The Office of the U.S. Trade Representative reports that on Dec. 2 a WTO compliance panel rejected EU claims that it complied with WTO rules by making minor changes to these subsidies and instead found that European governments had extended the subsidies in a way even more favorable to Airbus. In light of the panel report and what it called a lack of progress in efforts to resolve this dispute, USTR said it will issue later this week a Federal Register notice initiating a process under which it will consider increasing the existing tariff rates and expanding the number of EU goods subject to those tariffs.
Earlier this year France enacted a three percent tax on total annual revenues generated by some companies from providing certain digital interface services (e.g., e-marketplaces for goods and services) and Internet advertising services to, or aimed at, French users. USTR said Dec. 2 that it has determined that this digital services tax discriminates against U.S. companies and is inconsistent with prevailing tax principles on account of its retroactivity (to Jan. 1, 2019), its application to revenue rather than income, its extraterritorial application, and its purpose of penalizing particular U.S. technology companies.
In response, USTR is proposing to impose additional tariffs of up to 100 percent on products from France that are drawn from a preliminary list (see attached) that contains 63 tariff subheadings with an estimated import trade value for 2018 of $2.4 billion. Affected products include yogurt, butter, cheese, cosmetics, soap, handbags, and porcelain and china dinnerware.
USTR is also considering whether to impose fees or restrictions on services of France. USTR will hold a hearing on these issues Jan. 7 and is accepting written comments on them through Jan. 6. It is unclear when the proposed tariffs or other measures might take effect.
According to press sources, French Finance Minister Bruno Le Maire said the EU “would be ready to retaliate” if the U.S. imposes tariffs in this dispute.
Brazil and Argentina
In March 2018 President Trump suspended a 25 percent additional tariff on steel products and a 10 percent additional tariff on aluminum products with respect to Brazil and Argentina after they agreed to be subject to U.S. quotas. Trump said Dec. 2 that “effective immediately” he would “restore” these tariffs on “all steel and aluminum that is shipped into the U.S.” from Brazil and Argentina because they “have been presiding over a massive devaluation of their currencies” that has harmed U.S. farmers. However, at press time no official order making this change had been issued.
The U.S. is slated to impose an additional 15 percent tariff on List 4B goods from China as of Dec. 15. Press reports indicate that Beijing has been pushing for this increase to be canceled as part of the phase 1 trade agreement the two sides are currently negotiating. However, President Trump said this week that agreement could be delayed until after the U.S. presidential election in November 2020, suggesting that the List 4B tariff increase will take effect as scheduled.
© 2019, Sandler, Travis & Rosenberg, P.A. Originally published in the 12/4/19 issue of the Sandler, Travis & Rosenberg Trade Report. Reprinted by permission.