France has threatened a “strong European riposte” if the Trump administration follows through on a proposal to hit French cheese, Champagne, handbags and other products with tariffs of up to 100%.
The US Trade Representative proposed the tariffs on 2.4 billion dollars (£1.8 billion) of goods in retaliation for a French tax on global tech giants including Google, Amazon and Facebook.
The move is likely to increase trade tensions between the US and Europe, and set the stage for a tense meeting between President Donald Trump and French leader Emmanuel Macron.
“It’s simply unacceptable,” French finance minister Bruno Le Maire said on Tuesday. “It’s not the behaviour we expect from the United States towards one of its main allies.”
Mr Le Maire said the French tech tax is aimed at “establishing tax justice”. France wants digital companies to pay a fair share of taxes in countries where they make money and is pushing for an international agreement.
While insisting that a trade war is “not in anyone’s interest”, he said France talked this week with the European Commission about EU-wide retaliatory measures if Washington follows through with the tariffs next month.
The US tariffs could double the price American consumers pay for French imports and would come on top of a 25% tax on French wine imposed last month in a separate dispute over subsidies to Airbus and Boeing.
The Office of the US Trade Representative said France’s new digital services tax discriminates against US companies.
Mr Le Maire disputes that, saying it targets European and Chinese businesses too. The tax imposes a 3% annual levy on French revenues of any digital company with yearly global sales worth more than 750 million euros (£640 million) and French revenue exceeding 25 million euros (£21 million).
“What we want is a plan for international tax that is on the table” at the Organisation for Economic Co-operation and Development, Mr Le Maire said.
The US 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 dollars of Chinese imports in the biggest trade war since the 1930s.