Butter, blue cheese, and sparkling wine: Trump administration proposes retaliatory tariffs on $2.4B of French imports
The United States Trade Representative’s Office said Monday that the Trump administration would retaliate against France for its imposition of a digital services tax on companies such as Apple, Facebook, and Amazon, while also issuing a warning to other countries contemplating similar taxes.
The French tax takes 3% of the annual revenue of technology companies such as Amazon, Apple, and Facebook made from users inside the country. The USTR said the tax unfairly discriminates against U.S. companies and that it was proposing tariffs of up to 100% on French products totaling $2.4 billion in trade annually.
The targeted items include butter, cheddar and blue cheese, sparkling wine, handbags, cosmetics, soap, and porcelain tableware.
“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies,” U.S. Trade Representative Robert Lighthizer said.
The USTR on Monday began the process to establish the tariffs, which includes a public comment period before they can go into effect. The first public comment hearing was scheduled for Jan. 7.
France adopted the tax on tech companies to make it difficult for them to shift profits to low-tax jurisdictions in the European Union, such as Ireland. The Trump administration repeatedly warned against such measures as the French Parliament was debating the legislation. The tech companies have argued that they have followed the existing tax rules of the EU.
Lighthizer said the USTR was contemplating similar investigations into the digital services taxes enacted by Austria, Italy, and Turkey.
The USTR’s inquiry into France’s tax used the same section of the Trade Act used by the White House to levy tariffs of up to 25% on $550 billion worth of Chinese goods.
Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, and Senator Ron Wyden, an Oregon Democrat and the committee’s ranking minority member, applauded the announcement. “The French digital services tax is unreasonable, protectionist and discriminatory,” they said in a joint statement.