The Trump administration is proposing tariffs on up to $2.4bn worth of French imports, including Roquefort cheese, lipstick, handbags and sparkling wine, in retaliation for France’s tax on American tech giants including Google, Amazon and Facebook.
The Office of the US Trade Representative (USTR) says an investigation has found France’s new digital services tax discriminates against US companies. Itadded that the tariffs could reach 100%.
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 €750m ($830m) and French revenue exceeding €25m ($27.7m).
The US 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 US companies”, the US trade representative, Robert Lighthizer, said.
USTR investigated the French tax under Section 301 of the Trade Act of 1974 – the same provision the Trump administration used last year to look into China’s technology policies.
Lighthizer warned that the US was also exploring whether to pursue similar investigations into digital taxes introduced by Austria, Italy and Turkey.
USTR’s findings won favor from lawmakers on both side of the aisle, as well as US tech industry groups.
“The French digital services tax is unreasonable, protectionist and discriminatory,” senators Chuck Grassley and Ron Wyden, the top Republican and Democrat on the Senate finance committee, said in a joint statement.
The announcement was part of a clutch of protectionist trade actions on Monday aimed at longtime US allies.
Earlier in the day, Trump announced his administration would restore tariffs on steel and aluminum from Brazil and Argentina.
Both South American countries were among several US allies that Trump exempted from steel and aluminum tariffs in March 2018. But on Monday, Trump accused the countries of manipulating their currencies, lowering them to make their exports less expensive in world markets and gain an unfair trade advantage.
“Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers,” Trump said in a tweet.
But the countries’ weak currencies reflect their weak economies. Brazil’s currency, the real, hit a record low last week and unemployment is above 10% after years of deep recession. Argentina is contending with inflation above 50% and widespread poverty.
USTR also announced it would review hiking tariffs on European Union products and adding new ones, because of what it called “lack of progress” in resolving a dispute over aircraft subsidies.
The office said a decision by the World Trade Organization on Monday affirmed the US position that European subsidies to the plane maker Airbus continue to harm the US aerospace industry. The office did not provide specifics on what tariffs it might hike over that long-running dispute.