U.S. Targets French Luxury, Beauty Giants in Tariff Retaliation

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The U.S. is set to go after beauty and luxury companies in France after President Emmanuel Macron’s government said it plans to tax the Silicon Valley tech giants.

A list of imports from France worth $1.3 billion will be subject to an additional 25% tariff if both nations fail to reach an agreement. The list includes beauty products like lip and eye makeup preparations as well as handbags with an “outer surface of reptile leather,” the U.S. said in a statement on the U.S. Trade Representative’swebsite onJuly 10.

The U.S. intends to suspend the additional 25% tariff for a period of 180 days, which would lift in January should the parties fail to reach a deal. With the threat, the U.S. retaliation is going after France’s ubiquitous beauty and luxury companies such as LVMH, Kering SA, Hermes International and L’Oreal SA.

Read: Why ‘Digital Taxes’ Are the New Trade War Flashpoint: QuickTake

The countries have been engaged in a long-running dispute over digital taxes. The U.S. considers a potential tariff on its tech companies as “unreasonable” and “discriminatory.”

“France’s response will be unchanged,” Finance Minister Bruno Le Mairesaid in Brussels yesterday. “If there is no international solution by the end of 2020, we will, as we have always said, apply our national tax.”

A joint international solution via the Organisation for Economic Co-operation and Development is the only way to solve the disagreement over how best to tax the tech companies, people familiar with Le Maire’s thinking said.

— With assistance by William Horobin

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