Trump vows to retaliate over France’s digital services tax By Doug PalmER
President Donald Trump and French President Emmanuel Macron are expected to meet at the G-7 Summit in Biarritz, France, on Aug. 24-26. | Alex Wong/Getty Images
President Donald Trump warned France on Friday that it will shortly face retaliation over its decision to adopt a digital services tax, which the United States believes will disproportionately hit American tech giants like Apple, Facebook, Amazon and Google.
“France just put a digital tax on our great American technology companies,” Trump wrote on Twitter. “If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”
Trump expounded on his frustration with the tax at a press opportunity this afternoon in the Oval Office: “I told them. I said, ‘Don’t do it, because if you do it, I’m going to tax your wine — tariff or tax, call it whatever you want.'”
French President Emmanuel Macron signed the digital services tax into law this week. It targets companies with at least €750 million ($834 million) in global revenue and digital sales of €25 million in France from certain digital activities, such as targeted advertising and providing platforms to connect buyers and sellers.
“I have a good relationship with President Macron. But they shouldn’t have done this,” Trump told reporters, adding that he had just spoken by phone with the French leader.
The French action demonstrates “lack of commitment” to the ongoing negotiations on the digital tax issue within the Organization for Economic Cooperation and Development, White House spokesperson Judd Deere said earlier in the day.
“The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against U.S.-based firms. The U.S. Trade Representative has already launched a Section 301 investigation into France’s digital services tax, and the administration is looking closely at all other policy tools,” Deere added.
Trump’s tweet indicates he has already made up his mind to retaliate, even though the Office of the U.S. Trade Representative has not yet finished an investigation into the issue. The United Statesimported $2.1 billion worth of wine, beer and other alcoholic products from France last year.
However, the EU is also a top market for California wine. Last year, the industry exported $469 million worth to the 28-nation economic community.
USTR announced earlier this month it was opening a Section 301 investigation to determine whether the digital services tax unfairly discriminates against American firms. A hearing in that probe is set for Aug. 19, and normally any decision to retaliate would not come until the investigation is completed.
Trump and Macron are expected to meet at the G-7 Summit in Biarritz, France, on Aug. 24-26.
Trump has used Section 301 authority to impose a 25 percent duty on $250 billion worth of Chinese goods, and threatened another $300 billion worth of Chinese exports with the same tax.
However, the Trump administration has other options at its disposal, such as bringing a case at the World Trade Organization, or using a provision of the tax code to double taxes on French companies operating in the United States.
USTR has already proposed hiking duties on scotch imports from the European Union in a separate dispute over European government support for Airbus. And the EU has taxed U.S. whiskey imports in retaliation for tariffs that Trump imposed last year on steel and aluminum.
Source:Politico.com