President Donald Trump is mulling slapping tariffs on French imports in retaliation for a tax on American tech firms such as Apple, Google, Amazon and Facebook.
The measure could potentially hit US$2.4bn worth of French products including Roquefort cheese and wine, according to the Office of the US Trade Representative (USTR), which said an investigation found France’s new digital services tax was discriminatory against American companies and it may respond with 100% tariffs.
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US trade representative Robert Lighthizer said the move to consider imposing tariffs “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies”.
He continued: “The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies.”
France’s digital tax is aimed at preventing tech firms from setting up headquarters in low-tax European countries. The government has indicated it may impose a 3% annual levy on French revenues generated by companies with global sales exceeding EUR750m ($831.1m) and French revenue exceeding EUR25m.
Lighthizer also warned the US was exploring whether to pursue similar investigations into digital taxes introduced by Austria, Italy and Turkey.
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By GlobalDataSenators Chuck Grassley and Ron Wyden commented in a joint statement cited by The Guardian newspaper: “The French digital services tax is unreasonable, protectionist and discriminatory.”
On another matter, the USTR has also reportedly indicated it will review a tariff hike on goods from the European Union, and consider adding news ones because of a “lack of progress” in resolving a dispute over aircraft subsidies.
Europe has been engaged in a long-running spat with the US over subsidies paid to rival airline manufacturers Airbus and Boeing that the World Trade Organization has suggested hurts sales. The US hit the trading block with what is effectively an extra tax on European goods worth $21bn in April. In July, the USTR suggested it may impose further retaliatory tariffs amounting to around $4bn on EU goods.
A USTR notice is inviting comment on the option of imposing fees or restrictions on French services. The list of French products subject to potential duties includes 63 tariff subheadings and encompasses a host of other cheese products, yogurt and butter, as well as items outside of the food segment such as lipstick and handbags.
In response to the tariff proposals, French finance minister Bruno Le Maire described the measures as “unacceptable”.
News agency Reuters cited Le Maire as telling Radio Classique: “In case of new American sanctions, the European Union would be ready to riposte.”
The US trade body added that comments must be submitted by 6 January and “post-hearing rebuttal comments” by 14 January. A public hearing regarding proposed action to be taken is scheduled for 7 January.
