‘Tis the season to dole out more and more tariffs.
Since Monday, the United States has restored steel and aluminum tariffs on Brazil and Argentina, threatened tariffs on popular products from France, and alluded to increasing European Union tariffs in light of a new World Trade Organization ruling Monday.
Taking to Twitter early Monday, President Trump said, “Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers. Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from those countries.”
The move commits Brazil and Argentina to the 25 percent tariff on steel and 10 percent on aluminum they were exempted from in March upon agreeing to duty-free quotas instead. Trump claims the weakened currencies—owed to sluggish economic growth—have made crops from the two countries cheaper than what the U.S. produces.
“This makes it very hard for our manufacturers & farmers to fairly export their goods,” the president said in an ensuing tweet Monday.
By Monday evening, the tariff target was pointed squarely at France—and those duties could be levied at a rate as high as 100 percent.
Following the first segment of an investigation into France’s Digital Services Tax (DST), which the U.S. claims discriminates against American companies (particularly Google, Apple, Facebook and Amazon) by being “unusually burdensome,” the U.S. Trade Representative proposed additional tariffs of up to 100 percent on $2.4 billion worth of French goods. The DST, which was approved this summer, charges foreign entities 3 percent on the revenues they earn for providing digital services in France.
The list of targeted imports includes food stuffs like fresh cheese, butter and sparkling wine, popular holiday fare, but it also features 10 tariff codes of handbags, like those made of leather, plastics and textiles, meaning companies like LVMH could be hit hard if things progress.
What’s more, the investigation findings have prompted USTR to look into other countries’ digital taxes, which could mean tariffs for them, too.
“USTR is exploring whether to open Section 301 investigations into the digital service taxes of Austria, Italy and Turkey,” U.S Trade Representative Robert Lighthizer said.
For now, France remains the focus, and the USTR has invited public comments on these issues ahead of a public hearing scheduled for Jan. 7, which will determine what actions the U.S. takes on the matter. And with new tariffs taking effect either immediately or within weeks, a decision to levy the tariffs could have swift impact at the start of the year.
French Finance Minister Bruno Le Maire has already issued his comments on the matter, calling the move “unacceptable,” while other French officials have promised a dispute.
Also on Monday, USTR reacted to a recent World Trade Organization (WTO) ruling on the European Union Airbus subsidies case that prompted the U.S. in October to impose new tariffs on $7.5 billion worth of goods from the region, including 25 percent tariffs to U.K.-originating sweaters and wool suits.
Now that another WTO panel—prompted by EU counterclaims—has found the EU’s subsidies to Airbus did in fact harm the U.S. aerospace industry, the administration is considering upping the existing tariffs and potentially rolling out more.
“In light of today’s report and the lack of progress in efforts to resolve this dispute, the United States is initiating a process to assess increasing the tariff rates and subjecting additional EU products to the tariffs,” USTR said late Monday.
On Monday alone, the United States’ moves on trade served to exacerbate what has become a damaging trend of weaponizing tariffs and leaving apparel and footwear businesses little time to plan for changes in what is already a pressured market.
Speaking specifically about the steel and aluminum tariff reissue, Edward Meir, a consultant at ED&F Man Capital Markets, told The Wall Street Journal the latest action “underlines the whole malaise we’re seeing on the trade front.”
“We’re looking at a very dicey situation in December…I don’t have a good feeling about it,” he said.