UK industry bodies express relief after US tariff suspension – WWD

LONDON – UK industry bodies may have hailed the US move to suspend a series of retaliatory tariffs on fashion and luxury goods, but stressed they were fed up with consumer goods being used as pawns in international trade disputes.

Earlier this week, United States Trade Representative Katherine Tai said that after a year of reviewing digital services taxes adopted by many countries – including the United Kingdom, Italy and the Spain – The United States has decided to impose tariffs at 25% and immediately suspend for up to 180 days while all parties try to reach an agreement at the next OECD and G20 meetings.

The UK is hosting the 47th G7 summit in Cornwall, England, June 11-13, and solving the tech tax challenge will undoubtedly be one of the hottest topics on the agenda.

The UK government has said it “strongly supports” the G7, G20 and OECD discussions on long-term tax reform, and pledged to remove its new digital services tax for the giants of the economy. technology such as Amazon once a suitable international solution is in place.

In early April, the UK government introduced a new 2% tax on the income of search engines, social media services and online marketplaces that derive value from UK users. Most of them are American companies, including Amazon, Alphabet, Facebook and Apple.

The UK government, along with other countries, has said its aim is to rectify the “misalignment between where profits are taxed and where value is created” when it comes to digital businesses.

He wants to ensure that large digital multinationals “make a fair contribution to supporting vital public services” here.

As a result of this position, the US has sought to punish the UK with new tariffs and raise $ 325 million, the amount the US believes the UK tax will increase from US tech companies.

The retaliatory tax is said to have affected – and could still – affect UK exports of clothing, cosmetics, footwear, gold and jewelry to the United States

Men’s and women’s outerwear, women’s and girls’ dresses, men’s shirts and ties, cosmetics, leather shoes, gold necklaces, and jewelry made from base metals would all have been 25% tax.

Beauty products such as perfumes, lipsticks, eye makeup, nail polish, compressed and uncompressed powders, hair hairspray and bath salts were also in the focus of the USTR. .

Tai said earlier this week that the United States “is focused on finding a multilateral solution to a series of key international tax issues, including our concerns about taxes on digital services.”

She said the country “remains committed to reaching consensus on international tax issues through the OECD and G20 processes,” and said the temporary suspension “gives time for these negotiations to continue. move forward while retaining the ability to impose tariffs, if warranted in the future. “

Brands and industry organizations have expressed relief, for now.

“With the luxury perfumes sector showing strong growth in North America, including brands in our portfolio, we are optimistic about the suspension at this time,” said Emmanuel Saujet, co-founder of International Cosmetics & Perfumes, on North American distributor of brands such as House of Creed, Floris of London, Mizensir, Akro and Domaine Privé perfumes.

Millie Kendall, chief executive of the British Beauty Council, said she was “delighted that there is a 180-day suspension. Obviously, we don’t want a tariff imposed on personal care products destined for export to the US as it would devastate a remarkable number of UK SMEs. [small and medium enterprises] who see the United States as a very important trading partner. I hope that a resolution will be soon.

Adam Mansell, CEO of the UK Fashion & Textile Association, said the organization was “very happy that the United States has postponed the decision to impose retaliatory tariffs.”

He added that “it is extremely frustrating that the UK fashion and textile industry continues to be drawn into trade disputes which have nothing to do with our industry. We urge the UK government to ensure our industry is not unfairly penalized in head-to-head trade disputes, and we have called for this to be part of the broader negotiations with US trade authorities, ”in a future trade deal. post-Brexit. .

Helen Brocklebank, CEO of Walpole, which represents UK luxury firms in various industries, said the organization is “very relieved that tariffs have been suspended, pending talks, and also encouraged that the administration Biden is taking a proactive approach to try to find a global solution that rebalances the way America’s tech giants pay their way. ”

Brocklebank added that Walpole is “very convinced that it is not the right thing to do to pawn high-end British products in this argument, and hopes 180 days is long enough for there to be a resolution. “.

She noted that the UK luxury sector provides over 160,000 sustainable and highly skilled jobs across the UK and has “an age-old business relationship with the US, which translates into jobs and investment. [there]. Both sides must find a way to overcome this to ensure that this relationship is not damaged and that jobs on both sides of the Atlantic are not lost. “

Steve Lamar, president and CEO of the American Apparel & Footwear Association, joined his UK counterparts in saying punitive tariffs end up hurting consumers and workers in the industry.

Lamar said that while the AFOA supports the “efforts of the Biden administration to tackle unfair trade practices, we are concerned that tariffs in any form will continue to be used as a negotiating tool. Making Americans’ daily clothing more expensive is not a way to promote positive change abroad.

“Tariffs are a huge hidden tax paid by American consumers in the form of higher prices, and by American workers in the form of fewer jobs and lower wages. While we’re happy to see the U.S. Trade Representative suspending tariffs for at least six months as he continues to navigate the digital services tax dispute, it would have been better to see the threat of tariffs fully. deleted. “

The USTR began reviewing digital service taxes already adopted, or contemplated, by a number of countries a year ago.

In January, he determined that technology taxes adopted by some countries “discriminate against US digital businesses, are inconsistent with international tax principles, and weigh on US businesses.”

At the end of March, the USTR revealed proposed trade actions and then held public hearings for industry figures from each of the countries examined under the microscope – including the UK, India and Austria – can defend their arguments.

The USTR also confirmed that it has terminated four investigations involving Brazil, the Czech Republic, the European Union and Indonesia, “because those jurisdictions have not implemented the proposed digital service taxes.”

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