US may sanction $2.4bn worth of French products over digital tax, some duties to reach 100%

The US has proposed new tariffs on over two billion dollars in French goods, retaliating to a “digital tax” which it says “discriminates” against American products. Some of the products could be penalized by 100 percent.

The new levies could target trade in handbags, sparkling wines, cheeses, makeup products and other household goods, valued at $2.4 billion in total, the office of the US trade representative said on Monday.

 “France’s Digital Services Tax is unreasonable or discriminatory and burdens or restricts U.S. commerce,” the statement read, proposing “additional duties of up to 100 percent on products of France.”

Approved by the French Parliament in July, the digital services tax imposes a 3 percent fee on technology firms that earn more than $834 million in revenue globally and more than $27 million within France, which would include tech giants Google, Apple, Facebook and Amazon, who have all complained the tax targets them unfairly. Washington has also slammed the tax as “unreasonable” and questioned its fairness, vowing to retaliate.

US President Trump personally weighed in on the tax soon after it was passed, stating the US would take “substantial reciprocal action” in response to “Macron’s foolishness,” threatening to raise US tariffs on French wine. The threat drew a harsh rebuke from France’s agriculture minister who called the proposed hike “absurd” and “completely moronic.” Though Trump suggested in August that the two sides were close to working out a compromise around the tax, progress on an agreement has apparently stalled in light of Monday’s blustery statement.

US trade representative Robert Lighthizer added that Washington was exploring retaliation to similar digital service taxes proposed in Italy, Turkey and Austria, arguing he was focused on countering “growing protectionism” in the EU.

Washington also said it would consider hiking tariffs on the European Union on Monday after the World Trade Organization ruled that airplane producer Airbus was still receiving illegal subsidies from European governments, part of a separate trade spat that has yet to be resolved. It is still unclear how much those tariffs would increase.

The announcement of potential steep tax increases comes ahead of the NATO summit in London, that is to kick off on Tuesday. The proposal may inflame the already existing tensions between French President Emmanuel Macron and Trump amid reports that the US leader has been up in arms over Macron’s remark that the military block was “brain dead.”

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