France vows 'strong response' to threatened USA tariffs

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The threat of punitive tariffs came after a U.S. government investigation found France's new digital services tax would harm USA technology companies, and will intensify a festering trade dispute between Europe and the United States.

The US trade representative (USTR) said on Monday night, after completing an investigation, it found the French digital services tax unfairly discriminated against American technology companies such as Google, Apple, Facebook and Amazon.

On Monday, the Office of the US Trade Representative said the tariffs could target $2.4 billion (€2.2 billion) in imports, including cheese, wine, and handbags.

The trade agency said it would collect public comments on its proposed tariff list through January 14 and hold a public hearing on January 7.

Le Maire said the French tech tax is aimed at "establishing tax justice".

But prior to the release of the USTR's report, a French official said that France would dispute the trade agency's findings, repeating Paris' contention that the digital tax is not aimed specifically at USA technology companies.

The US has separately prepared to broaden tariffs against the European Union bloc as part of a long-running dispute over aircraft subsidies. In a separate press release, it also recommends new tariffs and says that there could be more investigations into the digital taxes of Austria, Italy and Turkey. "The USTR is focused on countering the growing protectionism of European Union member states, which unfairly targets USA companies".

President Donald Trump and France's Emmanuel Macron agreed in August to try to find a compromise, but a 90-day deadline for talks expired last week without a resolution.

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Earlier this year, France voted in favor of a new tax on tech giants.

The USTR report "concluded that France's Digital Services Tax (DST) discriminates against US companies, is inconsistent with prevailing principles of worldwide tax policy, and is unusually burdensome for affected US companies".

"We respectfully urge the United States, France, and all participating governments to focus on a successful and lasting tax policy resolution" at the Organization for Economic Cooperation and Development (OECD), she said in a statement. "This French taxation is not directed at any country, or against any company".

The U.S. move is a setback for efforts to stop a conflict over digital tax from intensifying.

"They've said they aren't sure they want a solution at the OECD", Le Maire said on radio station France Inter.

However, despite Trump's repeated threats to retaliate against French wines, only sparkling wine made the tariff list.

The U.S. government has announced it may slap tariffs of up to 100% on some French imports in retaliation for a French digital tax. 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.

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