In November, the Ministry of France of the Government of India and the Department of the Treasury of the US announced they reached an agreement with India in regards to the treatment of Digital Service Taxes (DSTs). Under this agreement, US companies accruing in India during the interim period will be credible against future taxes accrued under Pillar 1 of the Organization for Economic Co-operation and Development (OECD) agreement. April 1, 2022, until the implementation of Pillar 1 or March 31st, 2024 (whichever is earlier) is the duration period.
Now, however, the US will terminate the currently-suspended additional duties of goods of India that were adopted in the DST Section 301 investigation. The USTR is attempting to terminate this Section 301 trade action and will monitor the implementation of the agreement in coordination with the Treasury.
There is talk of improving competitiveness through trade – in particular how it relates to diversifying supply chains away from China – but it must include GSP renewal. Excluded from GSP, China has many GSP countries that are alternative suppliers. By eliminating tariffs on China’s competitors, GSP makes them more viable alternatives to low-cost Chinese producers. This, in turn, makes China more competitive.
Section 301 tariffs covered 54% of US imports from China from January-September 2021. During that same time period the products on section 301 lists accounted for:
- 96% of the approximate $763 million extra tariffs from GSP expiration
- 97% of the approximate $318 million in extra tariffs from individual GSP product exclusions
- 90% of the approximate $312 million in extra tariff due to lost of GSP for India
Making an extra $150 million per month in tariffs on China’s competitors would not help American companies to move supply chains out of China. Quite the opposite. American companies paid at least $760 million extra in taxes from January – September 2021 due to GSP expiration. This primarily affects small businesses. Retroactive GSP renewal would provide relief for companies dealing with supply chain disruptions, higher freight costs, and other inflationary pressures.
We are all facing these changes together, and Sobell will be with you every step of the way. We are keeping an eye on these tariffs and will keep our customers informed and updated as to what is happening in the world of logistics.
