US threatens to slap tariffs on France over digital tax

The US government has announced that it will impose tariffs of up to 100 per cent on $2.4 billion in imports of French products in response to France's tax on online services, which Washington claims discriminates against US tech firms.

US Trade Representative Robert Lighthizer on Monday said the companies impacted by the France's tax include Google, Facebook, Apple and Amazon, Efe news reported.

"The United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies," said Lighthizer, adding that the Donald Trump administration might investigate similar taxes imposed by Austria, Italy and Turkey.

A total of 63 tariffs have been suggested, valued at about $2.4 billion per year in French imports.

Among the French products to be subject to the tariffs are certain types of cheese, sparkling wine, perfume, handbags, yogurt, butter, beauty and makeup, including manicure and pedicure items, soap, porcelain and bone china.

The announcement on Monday is the result of an investigation that the US government has been conducting for five months regarding the digital tax imposed by Paris in July and it concluded that the tax "discriminates" against US companies, is incompatible with the prevailing principles of international fiscal policy and is unusually onerous for the affected US companies.

Despite the fact that for now the tariffs are only a recommendation and there is no date on which they will enter into force, it is expected that Trump soon will give the green light to the move.

On July 11, the French Senate passed the bill creating the 3% tax on tech companies providing services to French users, the passage of the law coming the day after the Trump administration announced plans to investigate whether the digital tax would discriminate against US big tech firms.

Later that month, Trump hinted that French wine could be subjected to additional tariffs because of what he said was French President Emmanuel Macron's "foolishness" in changing French taxation laws.

"France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA," Trump said on Twitter, adding "We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine!"

In his statement, Lighthizer said that his office's decision sends a clear signal that the US will take measures against digital tax regimes that discriminate or impose unwarranted costs on US firms.

The French tax affects companies whose annual revenues exceed 750 million euros ($845 million) worldwide, thus potentially affecting about 30 companies, most of them American firms but also including Chinese, British and German companies.

The US move was announced on the same day that the Trump administration also reimposed tariffs on Brazil and Argentina, two countries historically allied with Washington.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers," Trump tweeted.

"Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminium that is shipped into the US from those countries," he added.

Those two countries had been exempted by Trump from the 25 per cent tariff on steel and the 10 percent tariff on aluminium he had imposed on big US trade partners in May 2018.