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Stop using tariffs as negotiating tools, urge UK, US fashion experts


Stop using tariffs as negotiating tools urge UK US fashion experts

In retaliation against the digital services taxes adopted by the UK, Italy and Spain, the US had decided to impose 25 per cent tariffs on the import of British fashion and luxury goods. However, it soon suspended these tariffs for six months owing to upcoming G20 meetings and the G7 summit.

Making multinationals pay for digital services in the country

As per Women’s Wear Daily, UK will host the 47th G7 summit in Cornwall, England, from June 11 to 13. The primary agenda of this summit would be to resolve the online tech tax challenge. On its part, the British government remains committed to scrapping the new digital tax in support of tech giants such as Amazon. It introduced a new 2 per cent tax on revenues generated by UK-focused search engines, social media services and online marketplaces in April this year.

Most of these search engines and marketplaces are operated by US-based companies including Amazon, Facebook and Apple. By rectifying this misalignment, the British government aims to ensure that multinationals operating digital services in the country contribute to the nation’s development.

Tariff suspension to boost business of British SMEs

However, the US retaliated against this stance with new tariffs worth nearly $325 million. As per reports, the new tariffs cover men’s and women’s outerwear, women’s and girls’ dresses, men’s shirts and ties, beauty products, leather shoes, gold necklaces and jewelry made from base metal. Katherine Tai, Representative, USTR says, the US aims to first reach a consensus on its decision in the upcoming OECD and G20 meetings, and has therefore, suspended these tariffs for the time being.

The suspension of decision has been welcomed by most brands and industry organizations. Emmanuel Saujet, Co-Founder, International Cosmetics and Perfumes said, the suspension would boost the luxury fragrance business in North America. Millie Kendall, CEO, British Beauty Council, expressed her delight saying, the tariffs would have devastated many British SMEs considered significant trade partners by the US.

Protecting industry jobs

Adam Mansell, CEO, UK Fashion and Textile Association urged the British government to ensure tax-related disputes are included as a part of the wider negotiations with the US trade authorities. Helen Brocklebank, CEO, Walpole, noted the British luxury sector has a decades-long relationship with the US and creates around 160,000 sustainable and highly skilled jobs in both countries. Hence, trade representatives need to ensure that they do not endanger these jobs in either of these countries. Steve Lamar, President and CEO, American Apparel & Footwear Association (AAFA) is also opposed to using tariffs as negotiating tools and urged the government to remove them completely.