A New Tariff for Turkish Surfaces?
By Emerson Schwartzkopf
WASHINGTON – An international dispute over taxing the digital economy may lead to higher import costs from a variety of surfaces from Turkey.
The office of the U.S. Trade Representative (USTR) will hold a virtual hearing May 7 to consider a 25% tariff on certain goods imported from Turkey, including some natural stone and porcelain tile.
The proposed tariff is in response to foreign governments enacting a digital service tax (DST) on companies doing business online. DSTs are an attempt to collect tax from businesses doing e-commerce without having a physical office or assets in a country.
The USTR also announced similar actions last week against Austria, India, Italy, Spain and the United Kingdom, and published lists of goods that could face possible retaliatory tariffs to the countries’ DST rates.
Products that could get the new duty rates range from Italian neckties to Indian brassieres to British merry-go-rounds, but only Turkey’s list includes any hard surfaces.
The possible tariffs for Turkey include selected categories of marble, travertine and other calcareous stone. A Hard-Surface Report estimate shows the United States imported $14.9 million of material on the proposed tariff list in 2020, or only 8.2% of the $181.5 million of natural stone received from Turkey.
However, the proposed tariff would be imposed against virtually all Turkish porcelain-import tiles from Turkey, which Hard-Surface Report calculates at $108.1 million in 2020.
The proposed Section 301 tariffs on all selected Turkish goods would collect an amount roughly equal to Turkey’s DST tax revenues, which the USTR estimates at $160 million per year. Based on 2020 import data, the additional tariffs on Turkish hard surfaces would be $30.7 million per year, or 19.2% of the retaliatory collection.
The USTR will consider written comments on the action submitted by April 30, and accept rebuttal comments for a week after Turkey’s May 7 virtual hearing. The USTR will also hold a preliminary hearing on May 3 on its overall actions concerning DSTs.
The proposed tariffs come after initial investigations by the USTR in mid-2020 and preliminary findings announced in January.
When the USTR announced the proposed tariffs last week, it also halted actions against Brazil, the Czech Republic, the European Union and Indonesia because the countries hadn’t adopted or implemented a DST affecting U.S. companies.
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