There may be hope on new trade agreements between the U.S. and key trading partners.
In a press release last month, U.S. Trade Representative (USTR) Katherine Tai announced that ongoing Section 301 investigations of Digital Service Taxes (DSTs) used by six key U.S. trading partners were being concluded. The trading partners – Austria, India, Italy, Spain, Turkey, and the United Kingdom – will see tariffs suspended for six months, while new negotiations are underway to solve the trade imbalances and concerns of the U.S. and its partners.
The investigations had been started in 2020, as the Trump administration had been looking for trade balances and increased U.S. competition abroad. Earlier this month, Trump’s successor, President Biden, signed an executive order increasing competition for U.S. trade interests abroad – an order that will affect shipping and rail if implemented in its entirety.
Then, back in March of this year, the office of the USTR announced it would take trade actions against all countries named in the investigation pending review, and held a series of hearings. This termination was the conclusion of those investigations and paves the way for a future agreement.
Per the U.S. Federal Register, below is an overview of each investigation, and the official Notices of Action.
Austria: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 23 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $65 million. By inserting the following new U.S. notes 23(a) and 23(b) to subchapter III of chapter 99 in numerical sequence: “23 (a) For the purposes of heading 9903.90.02, products of Austria, as specified in this note, shall be subject to additional duties as provided herein. All products of Austria that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.02. The duties imposed by heading 9903.90.02 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
India: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 26 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $119 million. By inserting the following new U.S. notes 24(a) and 24(b) to subchapter III of chapter 99 in numerical sequence: 24 (a) For the purposes of heading 9903.90.03, products of India, as specified in this note, shall be subject to additional duties as provided herein. All products of India that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.03. The duties imposed by heading 9903.90.03 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
Italy: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 44 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $386 million. By inserting the following new U.S. notes 25(a) and 25(b) to subchapter III of chapter 99 in numerical sequence: 25 (a) For the purposes of heading 9903.90.04, products of Italy, as specified in this note, shall be subject to additional duties as provided herein. All products of Italy that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.04. The duties imposed by heading 9903.90.04 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
Spain: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 27 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $324 million. By inserting the following new U.S. notes 26(a) and 26(b) to subchapter III of chapter 99 in numerical sequence: 26 (a) For the purposes of heading 9903.90.05, products of Spain, as specified in this note, shall be subject to additional duties as provided herein. All products of Spain that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.05. The duties imposed by heading 9903.90.05 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
Turkey: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 32 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $310 million. By inserting the following new U.S. notes 27(a) and 27(b) to subchapter III of chapter 99 in numerical sequence: 27 (a) For the purposes of heading 9903.90.06, products of Turkey, as specified in this note, shall be subject to additional duties as provided herein. All products of Turkey that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.06. The duties imposed by heading 9903.90.06 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
United Kingdom: Notice of Action in the Section 301 Investigation
“Annex A contains a list of 67 tariff subheadings, with an estimated trade value for calendar year 2019 of approximately $887 million. By inserting the following new U.S. notes 28(a) and 28(b) to subchapter III of chapter 99 in numerical sequence: “28 (a) For the purposes of heading 9903.90.07, products of the United Kingdom, as specified in this note, shall be subject to additional duties as provided herein. All products of the United Kingdom that are classified in the subheadings enumerated in this note are subject to the additional duties imposed by heading 9903.90.07. The duties imposed by heading 9903.90.07 shall be in addition to the general duty rates provided for in the applicable provisions of the tariff schedule.”
USTR Tai had this to say regarding the announcement that the investigations were ending:
“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes.” She added “The United States remains committed to reaching a consensus on international tax issues through the OECD and G20 processes. Today’s actions provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future.”
We at MTS Logistics, and our newly-launched MTS Customs Brokerage, will keep you posted on all future developments regarding these ongoing trade investigations and other trade developments, as your trusted partner in shipping, logistics, and trade. We are a licensed Customs Broker and can assist with any customs or trade questions.
