The US threatens to impose tariffs of up to 100% on US $ 2.4 billion of goods imported from France in retaliation for tariffs on US technology companies.
The administration of US President Donal Trump announced yesterday that French wine, cheese and bags are on the list of products that could be targeted in mid-January 2020.
The statement came after a U.S. Trade Representative's investigation found France imposing tariffs on U.S. technology companies such as Google, Apple, Facebook and Amazon, though those companies had little presence in France. The Trump administration calls the French tax rate "discriminatory", which is inconsistent with the common practice of international tax policy and an extraordinary burden on the affected companies.
US Trade Representative Robert Lighthizer warned Washington is considering expanding the investigation to impose similar taxes in Austria, Italy and Turkey. Analysts say the US move could jeopardize international negotiation efforts to "truce" digital taxes.
The French government this year approved a "new digital service tax" on online economic activities, which affected the American technology company nheiefu. The French leader also expressed concern that the government could not capture revenue from companies selling or advertising online in France.
The US Trade Representative responded by opening an investigation to see if France's tax rates were unfairly targeting American companies. Trump in July threatened to impose a French wine tax in return for a new tax.
However, French and American leaders in August reached a 90-day agreement to suspend the dispute. Global negotiations are making progress, but such an agreement would require France to eliminate the digital tax it has imposed.
Previous presidents have considered European leaders a close economic ally, but the Trump administration has taken a tougher approach. Trump accused Europe of manipulating currencies and trade terms to trade surpluses with the United States. The White House boss has warned against imposing various taxes to block European goods from the US market.