The French government enacted a tax earlier this year on revenues generated by certain firms’ provision of digital services. This digital services tax was ostensibly designed to combat the alleged “under taxation” of digital companies through base erosion and profit-shifting.

France’s digital services tax almost exclusively targets American multinational corporations in a discriminatory manner. That was the conclusion of a just-issued report from the U.S. trade representative. Authorized under Section 301 of the Trade Act of 1974, the USTR report detailed how the digital services tax unfairly burdens American firms. It also raised the possibility of new tariffs on imports from France in response.