The United States Trade Representative (USTR) is seeking public comment on the potential implementation of tariffs of up to 25 percent on a long list of goods by six U.S. trading partners.
The USTR first initiated investigations into 10 jurisdictions in June 2020 concerning whether digital service taxes (DSTs) adopted or under consideration in each territory discriminated against U.S. digital companies. The agency concluded in January that DSTs in the United Kingdom, Austria, Spain, Italy, India, and Turkey were subject to action under Section 301 of the Trade Act of 1974 for placing such burdens on U.S. companies.
Investigations into the European Union, Brazil, Indonesia, and Czech Republic were terminated after DSTs scrutinized by the USTR were not adopted.
Section 301 allows the USTR to take action to enforce U.S. rights under trade agreements and respond to certain foreign trade practices. Its use increased as a response to China under the Trump administration.
A partial list of goods for which tariffs may be imposed regarding each of the six countries above includes:
- Footwear, cosmetics, jewelry, glazed ceramics, precious metals, and certain refrigeration or freezer equipment from the United Kingdom;
- Footwear, hats, glass, optical, and telecommunications equipment from Austria;
- Footwear, hats, glassware, handbags, belts, and certain seafood from Spain;
- Handbags, jackets and blazers, footwear, and spectacles from Italy;
- Textile floor coverings, glazed ceramic tiles, porcelain or china ceramic sinks from India; and
- Textile floor coverings, glazed ceramic tiles, and monumental or building stone from Turkey.
“The United States remains committed to reaching an international consensus through the OECD process on international tax issues,” said Ambassador Katherine Tai in a press release. “However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.”
The deadline to submit a request to appear at a hearing concerning the proposed actions in the USTR’s Section 301 investigations is April 21. The deadline to submit written comments is April 30.
Compliance message: “While the DSTs themselves primarily impact large multinational tech companies, retaliatory tariffs used to discourage them could impact U.S. companies of all sizes,” an alert from law firm Miller & Chevalier states. The firm recommends thinking now about tariff mitigation strategies.