US trade representative suspends digital service tax retaliatory tariffs for six months

The United States announced that the US trade representative (USTR) has approved 25 per cent tariffs on imports worth more than $2 billion from six countries, including Britain, over their digital services taxes but has immediately suspended them for six months to allow more time for international tax talks to continue. The move comes after an investigation under Section 301 of the US Trade Act of 1974 concluded that proposed unilateral digital services taxes from the UK and other countries discriminated against American companies.  A US trade office posits that the suspended tariffs, based on 2019 import data, would equal the digital taxes that would be collected from American companies.

The office published lists of imports from the countries that would face tariffs if negotiations failed to reach a solution that prohibits the imposition of unilateral digital services taxes. It said that tariffs would be put on about $887 million of goods from Britain, including clothing, footwear and cosmetics.

Helen Brocklebank, CEO Walpole said: “Walpole is very relieved that the tariffs have been suspended pending talks and also encouraged that the Biden administration is taking a proactive approach to trying to find a global solution that rebalances how the US tech giants pay their way. This being said, we feel very strongly that it is the wrong thing to do to make high end British goods pawns in this argument, and hope that 180 days is long enough for there to be a resolution.”

She added: “The British luxury sector provides over 160,000 sustainable and highly skilled jobs around the UK and has a centuries old trading relationship with the US, resulting in employment and investment in the US.  Both sides must find a way through this to ensure that this relationship is not damaged and jobs on both sides of the Atlantic are not lost.”

In April, Walpole submitted comments to the USTR explaining the negative impacts of the proposed tariffs on both the UK luxury sector and investments in the US economy and US job creation.

Please go here to read the press release from the USTR.