The beauty industry may be collateral damage in the trade battle between the US and France. America’s global purchases of imported beauty cosmetics and skincare products totaled $5.1 billion in 2019, with French beauty ranking number one, representing $807.6 million, up 4.6% from 2015.
The Trump administration announced plans last Friday to impose 25 percent tariffs on about $1.3 billion worth of French products in response to the country’s digital service tax that impacts major US technology companies.
The US move follows a U.S. Section 301 probe, which concluded the French tax discriminates against US tech firms such as Google, Facebook, and Apple Inc.
The tariffs are set to take effect on January 6, 2021. Products set to be subject to the tariffs include makeup, soap, and handbags, according to a notice issued by the Office of the United States Trade Representative (USTR).
The tariffs announced Friday are smaller than the tariffs proposed in December, both in terms of the rate and the number of products. The office of U.S. Trade Representative Robert Lighthizer said it would delay implementation of the action for up to 180 days if “the Trade Representative determines that substantial progress is being made, or that a delay is necessary or desirable to obtain U.S. rights or satisfactory solution.”
The USTR office said delaying the start of the tariffs would allow further time to resolve the issue, including through discussions in the Organisation for Economic Co-operation and Development (OECD). The decision also reflected France’s agreement to defer the collection of its 3% tax on digital services.
That gives the US and France until Jan. 6, 2021, to hold “bilateral and multilateral discussions that could lead to a satisfactory resolution of this matter,” the USTR said.
The US administration considers any taxation on its tech companies as unreasonable; however, “France’s response will be unchanged,” the country’s finance minister, Bruno Le Maire, said in Brussels this week. “If there is no international solution by the end of 2020, we will, as we have always said, apply our national tax.”
