The Trump administration is proposing tariffs on up to $2.4 billion worth of French imports — from Roquefort cheese to sparkling wine to handbags — in retaliation for France's tax on American tech giants like Google, Amazon and Facebook.
The Office of the U.S. Trade Representative said France's new "digital services tax" discriminates against U.S. companies and that the tariffs could reach 100%. The agency will accept public comment on the plan through January 6 and hold a hearing January 7.
The French tax is designed to prevent tech companies from dodging taxes by putting headquarters in low-tax European countries. It would impose a 3% annual levy on French revenues of digital companies with yearly global sales worth more than €750 million ($830 million) and French revenue exceeding €25 million ($27.6 million), levels that would easily apply to fast-growing U.S. tech giants like Google, Amazon and Facebook.
The U.S. also criticized the French tax for targeting companies' revenue, not their profits, and for being retroactive.
The decision to pursue tariffs "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.
His agency investigated the French tax under Section 301 of the Trade Act of 1974 — the same provision the Trump administration used last year to probe China's technology policies, leading to tariffs on more than $360 billion worth of Chinese imports in the biggest trade war since the 1930s.
Lighthizer warned that the U.S. is also exploring whether to pursue Section 301 investigations into digital taxes introduced by Austria, Italy and Turkey.
The decision to target France got bipartisan endorsement from Iowa Republican Sen. Chuck Grassley and Oregon Democratic Sen. Ron Wyden. In a joint statement, they assailed the French digital tax as "unreasonable, protectionist and discriminatory."
The tech trade group ITI said it welcomed the administration's decision and urged continued negotiations on international taxes under the auspices of the Organization for Economic Cooperation and Development.
The tariff announcement is likely to increase tension between the United States and Europe. The U.S. is already readying tariffs on $7.5 billion in EU imports over illegal subsidies for the European aircraft giant Airbus. The World Trade Organization on Monday gave the U.S. a greenlight to impose those levies, ruling that the EU had not complied with an order to end the subsidies.