France and EU ready to respond to US threat of new tariffs

France warns US it will hit back with the full support of the EU if Donald Trump imposes tariffs on French products in response to country’s digital tax plans

  • US considering 100 per cent tariffs on goods including Champagne and lipstick
  • Response to French decision to tax local digital business of big tech companies   
  • French Finance Minister Bruno Le Maire met with EU trade chief Phil Hogan 

France has warned it will retaliate with the full support of the European Union if the US imposes tariffs on up to $2.4 billion worth of French products in response to the country’s digital tax plans. 

The US is considering 100 per cent tariffs on some goods in response to France’s decision to tax the local digital business of major tech companies such as Google and Facebook. 

With a decision on the tariffs expected in coming days, French Finance Minister Bruno Le Maire met today with EU trade chief Phil Hogan in Paris.

 French Finance Minister Bruno Le Maire (left) met today with EU trade chief Phil Hogan in Paris

‘We believe that the American project of sanctions against the French digital tax is unfriendly, inappropriate and illegitimate,’ Le Maire said.

If US tariffs were to be imposed, ‘we would bring the case to the World Trade Organization and we would be ready to react,’ Le Maire said.

Hogan said the question of the digital tax is a ‘very major bone of contention with the United States.’

‘The EU commission will stand together with France’, he added.

France has been imposing a three per cent annual tax on revenues of digital companies with yearly global sales worth more than 750 million euros and French revenue exceeding 25 million euros since last year. 

The country is pushing for a global agreement on how to better tax digital operations, which are typically reported in the company’s home country instead of the place where it does business.

The US is considering 100 per cent tariffs on some goods in response to France’s decision to tax the local digital business of major tech companies

 If US tariffs were to be imposed, ‘we would bring the case to the World Trade Organization and we would be ready to react,’ Le Maire said

Asked about potential retaliation measures from France, Le Maire said the country is considering ‘all options.’ He did not further elaborate.

The US is expected to announce the potential tariffs by next week, but France called on the Trump administration to refrain from taking a decision while negotiations are ongoing at the Organization for Economic Cooperation and Development.

In a phone call with US Treasury Secretary Steven Mnuchin on Monday, Le Maire said the sides had agreed ‘to intensify efforts in the coming days to try to find a compromise.’

In talks with Trump last August, French President Emmanuel Macron vowed France would abandon its digital tax if an agreement to better tax digital businesses was found at the OECD, which comprises 134 countries.

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