US President Donald Trump has proposed tariffs of up to US$2.4bn worth of French imports including butter, cheese and sparkling wine in retaliation for France’s tax on US tech companies including Google, Amazon and Facebook.
The Office of the US Trade Representative (USTR) said on 2 December that its investigation had found France’s new digital services tax discriminated against US companies.
The French levy is designed to prevent tech firms from dodging taxes by putting headquarters in low-tax European countries, the Guardian wrote. It would impose a 3% annual levy on French revenues of digital companies with yearly global sales worth more than €750m (US$830m) and French revenue exceeding €25m ($27.7m).
The USTR said the French tax “is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalising particular US technology companies.”
It invited public comment on its tariff proposals, which could reach 100% on certain French products, to be submitted by 6 January.
France warned the USA of strong EU retaliation if it imposed tariffs.
“We were in contact yesterday with the EU to ensure that if there are new American tariffs there will be a European response, a strong response,” French economy and finance minister, Bruno Le Maire, told Radio Classique.
“This is not the sort of behaviour one expects from the USA with respect to one of its main allies, France, and to Europe in general,” Le Maire said, while adding that he wanted to avoid a pattern of sanctions and retaliation.
The USTR investigated the French tax under Section 301 of the Trade Act of 1974 – the same provision the Trump administration used last year to look into China’s technology policies, the Guardian wrote.
USTR representative Robert Lighthizer said the USA was also exploring whether to pursue similar investigations into digital taxes introduced by Austria, Italy and Turkey.