UK fashion sector “disappointed” over US ‘tech tax’ threat | Apparel Industry News

The Section 301 action by the US will include clothing, ceramics, make-up, games consoles and furniture

The UK’s fashion and textile sector has expressed its disappointment over the potential implementation of tariffs of up to 25% by the US on a raft of items, including clothing, in retaliation over a UK tax on technology firms.

The Biden Administration issued the warning yesterday (29 March), describing the recently introduced digital services tax (DST) as “unreasonable and discriminatory and burdens or restricts US commerce”.

The DST taxes the revenues of technology firms 2% on their revenues. It includes search engines, social media services and online marketplaces which derive value from UK users, and comes into effect on 1 April 2020. The DST applies only to companies with digital services revenues exceeding GBP500m (US$687m) and UK digital services revenues exceeding GBP25m.

The Section 301 action by the US will include clothing, ceramics, make-up, games consoles and furniture, and is designed to apply political pressure on the UK and other countries over the imposition of such taxes. It is designed to raise US$325m, the amount the US believes the UK tax will raise from US tech companies.

The tariffs are now subject to a consultation in the US over the next few weeks. Clothing items on the list include women’s and girl’s dresses, men’s and women’s coats, men’s shirts, ties, shoes and jewellery, according to a list published by the Biden Administration.

“It was only earlier this month that the US removed additional tariffs on some UK-made fashion products so it is hugely disappointing that yet again our manufacturers are threatened with additional tariffs, particularly as the trade dispute has nothing to do with our industry,” said Adam Mansell, CEO of the UK Fashion & Textile Association (UKFT).

“At a time when we are trying to start discussions over a UK-US trade deal, it is extremely important that both governments get around the table to remove this threat as soon as possible. With the industry still struggling with the impact of Covid-19 and understanding the new trade arrangements with the EU, an additional burden on our exports couldn’t come at a worse time.”

A UK government spokesperson told the BBC: “Like many countries around the world, we want to make sure tech firms pay their fair share of tax. Our digital services tax (DST) is reasonable, proportionate, and non-discriminatory.

“It’s also temporary. We’re working positively with the US and other international partners to find a global solution to this problem and will remove the DST when that is in place.”

It is understood the UK and US held talks about the digital services tax on 4 December, and UK government sources stressed that the tariff list was being seen as procedural, rather than an escalation, according to the BBC.

The list includes:

Clothing items included in US Section 301 proposal



6104.43.20 Women’s or girls’ dresses, knitted or crocheted, of synthetic fibers, nesoi
6201.12.20 Men’s or boys’ overcoats, carcoats, capes, & similar coats of cotton, not knit or crocheted, not containing 15% or more by wt of down, etc
6201.92.45 Men’s or boys’ anoraks, windbreakers & sim articles nesoi, not knit/crochet, cotton, not cont. 15% or more by wt of down, etc, o/than rec perf outwear
6202.12.20 Women’s or girls’ overcoats, carcoats, etc, not knitted or crocheted, of cotton, not containing 15% or more by weight of down, etc
6202.13.40 Women’s or girls’ overcoats, carcoats, capes, cloaks and similar articles, not knitted or crocheted, of man-made fibers, nesoi
6202.92.90 Women’s/girls’ anoraks, windbreakers & similar articles, nt knit/crochet, cotton, nt cont. 15% or more by wt of down, etc, o/than rec perf outwear
6204.43.40 Women’s or girls’ dresses, not knitted or crocheted, of synthetic fibers, nesoi
6204.44.40 Women’s or girls’ dresses, not knitted or crocheted, of artificial fibers, nesoi
6204.49.10 Women’s or girls’ dresses, not knitted or crocheted, containing 70% or more by weight of silk or silk waste
6205.20.20 Men’s or boys’ shirts, not knitted or crocheted, of cotton, nesoi
6215.10.00 Ties, bow ties and cravats, not knitted or crocheted, of silk or silk waste
6403.59.30 Footwear w/outer soles and uppers of leather, not covering the ankle, welt, nesoi
6403.59.90 Footwear w/outer soles and uppers of leather, not cov. ankle, n/welt, for persons other than men, youths and boys
6403.91.30 Footwear w/outer soles of rubber/plastics/composition leather & uppers of leather, covering the ankle, welt
6403.99.60 Footwear w/outer soles of rubber/plastics/comp. leather & uppers of leather, n/cov. ankle, n/welt, for men, youths and boys, nesoi
6404.20.40 Footwear w/outer soles of leather/comp. leath., n/o 50% by wt. rub./plast. or rub./plast./text. & 10%+ by wt. rub./plast., val. o/$2.50/pr
7113.11.50 Silver articles of jewelry and parts thereof, nesoi, valued over $18per dozen pieces or parts
7113.19.29 Gold necklaces and neck chains (o/than of rope or mixed links)
7113.19.50 Precious metal (o/than silver) articles of jewelry and parts thereo, whether or not plated or clad with precious metal, nesoi
7116.20.50 Precious stone articles, nesoi
7117.19.90 Imitation jewelry (o/than toy jewelry & rope, curb, cable, chain,etc.), of base metal (wheth. or n/plated w/prec. metal), nesoi

Click here to view the full list.