White HouseAt a NATO meeting on Tuesday, December 3, 2019, President Trump declared that he was prepared to wait to negotiate a trade agreement with China until after the 2020 U.S. presidential election, dashing hopes that “phase one” of an interim agreement was to be reached soon.  The 15% Section 301 List 4b tariffs are likely to go into effect on December 15, 2019 if the U.S. and China do not reach a partial agreement soon.

In the same series of meetings, President Trump also threatened to authorize tariffs of up to 100% on $2.4 billion worth of imports from France in retaliation for France’s 3% digital services tax (“DST”) on tech companies.  The unexpected impact of tariffs on French imports could affect numerous consumer articles, including cheese, Champagne, handbags, cosmetics and fine dinnerware.  The threat of tariffs on consumer goods comes right before the holiday buying season, and following a report from the Office of the U.S. Trade Representative (“USTR”) published on Monday, December 2, 2019 concluding that the French DST is “unreasonable, discriminatory, and burdens U.S. commerce.”  While French President Emanuel Macron said he is confident that he and President Trump can find a solution regarding the DST, French Finance Minister Bruno Le Maire stated that the European Union would retaliate against the U.S. if Trump authorizes the tariffs.  The USTR is soliciting comments from the public on the proposed trade action against France, in addition to comments on the option of imposing fees or restrictions on French services. Comments must be submitted by January 6, 2020.

After having found that France’s DST is discriminatory and disproportionately harms U.S. businesses, a World Trade Organization (“WTO”) challenge from the U.S. could follow.  However, after December 10, 2019, the WTO appellate body will have only one judge remaining and will no longer be able to hear new cases due to an American block on replacing the judges, meaning this trade dispute with France may have to be settled bilaterally.  President Trump later said on the trade dispute with France that “we’ll probably be able to work it out” and described the dispute as “minor.”

We will continue to monitor this situation and will provide future updates as additional details become available.  If you have any questions regarding the new tariffs on France or the upcoming List 4b tariffs on China, please contact Husch Blackwell’s International Trade and Supply Chain team.