The U.S. has announced tariffs on certain French imports following the country’s decision to impose a digital services tax that impacts U.S. tech companies that do business there. The U.S. tariffs are targeted at grooming and beauty products and other goods, primarily in the luxury sector.

The French digital service tax imposes a three-percent tax sales on revenues earned in the country, and is applicable to any internet company which has revenues at least €750 million ($855 million) globally and €25 million ($28.5 million) in France. The U.S. government claims the tax is discriminatory against U.S. companies, is contradictory to international tax standards and unreasonably targets a sector due to its commercial success. The U.S. and France had been negotiating the issue through the Organization for Economic Co-operation and Development.

The U.S. Trade Representative (USTR) held a hearing in January to seek public comments on a proposal to apply 100-percent duties on a list of up to 63 products from France. The final list, subject to a 25-percent tariff, represents $1.3 billion in imports annually, and consists of a subset of the original roster. Among the proposed products that did not make the final list are Champagne, cheese and fine dinnerware.

The USTR has postponed the implementation of the tariffs for 180 days, to January 6, 2021, to allow additional time for bilateral and multilateral discussions that could lead to a satisfactory resolution of the matter.