USA proposes tariffs on up to $2.4 billion in French imports
Dec 04 2019
As a result, the U.S. conducted an investigation under section 301, that concluded that France's digital services tax is discriminatory against United States companies.
For more than a year the USA and China have been locked in a bitter trade battle that has seen both sides impose tariffs on billions of dollars worth of each another's goods. It has always been a point of contention between Trump and French President Emmanuel Macron, who initially enjoyed a relatively drama-free relationship.
French finance minister Bruno Le Maire said in a statement the new U.S. tariff is "unacceptable" and could be met with a "strong response" from the EU.
According to a KPMG fact-sheet, Le Maire previously told G7 members the digital services tax would only withdrawn or altered if a "credible decision" was made at the OECD-level.
The EU backed up his comments, with commission spokesman Daniel Rosario saying that "as in all other trade-related matters the EU will act and react as one and it will remain united".
The announcement came just hours before Trump is due to meet his French counterpart Emmanuel Macron on the sidelines of the North Atlantic Treaty Organisation summit in London on Tuesday.
"They're our companies, they're American companies, I want to tax them, those companies". If anyone is going to take advantage of American companies, it's going to be us.
"I'm going to call him so that he doesn't penalize us".
But on Tuesday the president said he liked the idea of "waiting until after the election" to make a pact with Beijing, adding: "We'll see whether or not there's a deal".
Macron has devoted considerable energy into creating a close diplomatic relationship with Trump, notably seeking to persuade him to talk directly to Iran's leadership over its contested nuclear programme.
In addition to the duties over the French digital tax, the Trump administration also threatened to increase its punitive measures against European goods worth $7.5 billion in the context of the Airbus subsidies.
"What we want is a plan for worldwide tax that is on the table" at the Organization for Economic Cooperation and Development, Le Maire said.
US Trade Representative Robert Lighthizer added that the digital services taxes of Austria, Italy and Turkey could also be subject to the same investigation. If the U.S. continues the trade war, China will fight back.
The office of the U.S. Trade Representative said Monday the law discriminates against U.S. companies, including Google, Apple, Facebook and Amazon. The tax imposes a 3% annual levy on French revenues of any digital company with yearly global sales worth more than 750 million euros ($830 million) and French revenue exceeding 25 million euros.
The French tax is created to prevent tech companies from dodging taxes by putting headquarters in low-tax European Union countries.
French champagne producers and exporters decried a United States government threat to slap tariffs of up to 100 per cent on a range of French products including sparkling wines, saying they have nothing to do with the dispute and calling for government help.