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U.S. vows 100% tariffs on French Champagne, cheese, handbags over digital tax

Published 12/03/2019, 05:40 AM
Updated 12/03/2019, 05:40 AM
© Reuters. FILE PHOTO: A cheesemonger cuts a large piece of Comte cheese at Beaufils affineur in Paris

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) - The U.S. government on Monday said it may slap punitive duties of up to 100% on $2.4 billion in imports from France of Champagne, handbags, cheese and other products, after concluding that France's new digital services tax would harm U.S. tech companies.

The U.S. Trade Representative's office said its "Section 301" investigation found that the French tax was "inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies," including Alphabet Inc's Google (O:GOOGL), Facebook Inc (O:FB), Apple Inc (O:AAPL) and Inc (O:AMZN).

U.S. Trade Representative Robert Lighthizer said the government was exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.

"The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies," Lighthizer said. His statement made no mention of proposed digital taxes in Canada or Britain.

The U.S. trade agency said it would collect public comments through Jan. 14 on its proposed tariff list as well as the option of imposing fees or restrictions on French services, with a public hearing scheduled for Jan. 7.

It did not specify an effective date for the proposed 100% duties.


The list targets some products that were spared from 25% tariffs imposed by the United States over disputed European Union aircraft subsidies, including sparkling wines, handbags and make-up preparations - products that would hit French luxury goods giant LVMH (PA:LVMH) and cosmetics maker L'Oreal (PA:OREP) hard.

Gruyere cheese, also spared from the USTR aircraft tariffs levied in October, featured prominently in the list of French products targeted for 100% duties, along with numerous other cheeses.

The findings won favor from U.S. lawmakers and U.S. tech industry groups, who have long argued that the tax unfairly targets U.S firms.

"The French digital services tax is unreasonable, protectionist and discriminatory," Senators Charles Grassley and Ron Wyden, the top Republican and Democrat, respectively, on the Senate Finance Committee, said in a joint statement.

Spokespeople for the French embassy and the European Union delegation in Washington could not immediately be reached for comment.

But prior to the release of the USTR's report, a French official said that France would dispute the trade agency's findings, repeating Paris' contention that the digital tax is not aimed specifically at U.S. technology companies.

"We will not give up on taxation" of digital firms, the official said.

© Reuters. FILE PHOTO: A cheesemonger cuts a large piece of Comte cheese at Beaufils affineur in Paris

France’s 3% levy applies to revenue from digital services earned by firms with more than 25 million euros ($27.86 million) in French revenue and 750 million euros (644 million pounds) worldwide.

The USTR's report and proposed tariff list follow months of negotiations between French Finance Minister Bruno Le Maire and U.S. Treasury Secretary Steven Mnuchin over a global overhaul of digital tax rules. The two struck a compromise in August at a G7 summit in France that would refund U.S. firms the difference between the French tax and a new mechanism being drawn up through the Organization for Economic Cooperation and Development.

But Trump never formally endorsed that deal and declined to say whether his French tariff threat was off the table.

Latest comments

It amazes me that Trump thinks its fine that American companies, as they have no high street presence as opposed to their competitors around Europe, can not pay their fair share of taxes for selling to EU consumers - every other business in the EU not only has to pay local sales tax and business rates let alone the other overheads of selling to the public - the likes of Amazon should at least pay their fair share of tax rather than the free ride they've been having over the last decade - the likes of Starbucks do some dodgy accounting in terms of buying their beans from the lowest country on tax and charge their shops in the UK a fortune for those beans, meaning they make no profit in the UK - this is just flash accounting - for the cost of a Starbucks coffee, of course they're making a real profit from every coffee they sell in the UK - they just "choose" to make their profits elsewhere where tax is lowest - this is the sort of shenanigans that you'd expect from Trump - Chief mafiaosa
Reading American representatives accusing European or anyone else of being protectionnism is clearly a joke, or pure hypocrisy, as you like
And now the President defends tech giants after threatening them.. not bad either
First Brazil and Argentina, now EU going to eat some of these tariffs and China on 15 Dec? Time to dump all these pump? Bad bad sign for this hopium market.
The EU will not pay these tariffs. The US consumer will. Trump hates Americans just as Putin and NK instruct him to.
It did not work with China,Canada,Mexico and some more.Why should work with Europe?Somehow it seems that he just wants to keep his promises to his base.The fact that those tariffs harm The American Economy seems to be of a secondary importance.Apres MOI le deluge.
I kind of like what they're doing here. It would be nice to see this Tech grow... However, it does seem like we're Picking-and-choosing arbitrary stuff. And picking-on certain Countries, long been considered our Allies.. . But, what caught me off-guard, my Jaw dropped to the ground, when I saw "The USTR is focused on countering the growing protectionism of EU member states" WHAT?!?!? Who are WE to be lecturing Anybody, about Protectionism...of All Things. That's totally like the pot calling the kettle Black, if you know what I mean. Republicans have Always been strongly and solidly Against protectionism... until trump.
Tariffs, are Simply the Lazy-Man's way of Negotiating. A definite Mark, of a weak leader.
That is because Trump was actually a registered democrat. He actually voted for Hillary when she ran against Obama. He is an economic liberal like most democrats who happen to hijack the GOP. This is not conservative thinking or behavior. He is an economic liberal just like Warren and Sanders.
Tarriffs lead to more tarrifs, and nobody wins (from) a trade war, exactly
Is that mean trump will sign with china ? Trump just go on with more tariff with other country
seem fair to me
so it will be cheaper to fly to EU to buy a nice bag?
Europe keeps finding ways to extract money from huge american companies(microsoft,google,apple)
Should countries in Europe not do this? In the end, a lot of the business of these companies is also done in Europe with as few taxes paid as possible. People are complaining about the growing inequality between the 1% and the rest. That inequality mainly grows because the companies pay very little compared to their huge incomes. I would prefer direct payments to employees to actually grow (adjusted to inflation) and to have less socialist programs because of a smaller need for them, but as long as the discrepancy keeps getting wider and wider what can be done?
keep doing what you doing , usa will go into recession very soon .
Gee, haven’t heard that one before :-)
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