The U.S. Trade Representative’s Office announced Wednesday that it had launched an investigation into whether U.S. companies were being unfairly targeted by a tax on digital services expected to pass the French parliament Thursday, raising the threat of retaliatory tariffs.
The proposed tax would take 3% of the total annual revenue of technology companies such as Amazon, Apple, and Facebook.
“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” said U.S. Trade Representative Robert Lighthizer. “The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”
France and the U.K. have both proposed taxing tech companies to make it difficult for them to shift profits to low-tax jurisdictions in the European Union, such as Ireland. The Trump administration has repeatedly warned against such measures and warned of possible retaliation. The companies have argued that they have followed the existing tax rules of the EU.
The USTR has said it will open the investigation under Section 301 of the U.S. Trade Act, the same section used by the White House to levy tariffs of 25% on $250 billion worth of Chinese goods.
The U.S. and the EU have been in ongoing discussions to start trade talks, but negotiations haven’t progressed due to a dispute over whether EU agricultural policies will be up for discussion. The EU has ruled that out, while the U.S. has demanded they be included.
