President Trump teased Friday that France will be hit with retaliatory measures targeting French wine after French President Emmanuel Macron approved a new digital tax on tech giants, many from the United States.
“France just put a digital tax on our great American technology companies. 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 tweeted.
France just put a digital tax on our great American technology companies. 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!
— Donald J. Trump (@realDonaldTrump) July 26, 2019
Macron signed a measure into law this week imposing a 3% tax on revenue generated by tech companies that provide digital services to French users. The levy, passed by lawmakers this month, applies to digital companies with global revenue of at least $845 million or €750 million, and sales of $28 million or €25 million in France.
The structure ensures some of Silicon Valley’s biggest firms, including Google, Facebook, Amazon, and Apple, will be hit with the tax.
White House spokesman Judd Deere said the Trump administration is “extremely disappointed” by the adoption of the digital services tax.
“France’s unilateral measure appears to target innovative U.S. technology firms that provide services in distinct sectors of the economy. It also demonstrates France’s lack of commitment to the ongoing OECD negotiations,” Deere said in a statement. “The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against U.S.-based firms.”
France’s new levy landed it in the crosshairs of Trump’s global trade war, as U.S. Trade Representative Robert Lighthizer announced this month an investigation under Section 301 of the Trade Act into the tax. Trump used that mechanism to impose tariffs on China amid escalating trade tensions with Beijing.
Lighthizer said then the U.S. is “very concerned” the so-called digital services tax “unfairly targets American companies.”
In his statement Friday, Deere said the U.S. is “looking closely at all other policy tools,” in addition to the Section 301 investigation.
If the president were to impose duties on French wine as retaliation for the tax on internet companies, France would join a growing list of countries threatened with tariffs. Trump, who in 2011 purchased a vineyard in Charlottesville, Virginia, has already boosted tariffs up to 25% on $200 billion in Chinese goods, but stopped short of hitting the remaining $300 billion with financial sanctions after meeting with President Xi Jinping last month at the Group of 20 summit.
The president also warned he would hit all products imported from Mexico with a 5% punitive levy because of his disapproval of the country’s handling of illegal immigration. The president abandoned that tariff threat, though, after Mexico and the U.S. agreed to a series of measures designed to stem the flow of migrants crossing the U.S.-Mexico border.
Trump has been clear he views tariffs as a way to extract concessions from negotiating partners, calling them a “great negotiating tool” and “great revenue producer.”
