US trade officials have proposed a new wave of tariffs on French goods, including cheese and champagne, after France imposed a new tax on digital services.
US officials proposed the US tariffs covering numerous products, including cheeses, beauty products, handbags and sparkling wine, including champagne, after France announced a new tax on digital services. The new French tax would affect large US tech companies, including Facebook and Google.
The office of the United States Trade Representative stated that new taxes of up to 100% could be imposed on approximately $2.4 billion worth of French products. This move could further widen the gap between members of the European Union and President Donald Trump, who threatened France in July with "substantial reciprocal action" if it proceeded with its digital services tax.
France's Finance Minister Bruno Le Maire claimed that the European Union "would be ready to retaliate strongly" against US sanctions and that the proposed tariffs on French products is "unacceptable".
Le Maire said: "It is not what one would expect from an ally, it is not what one would expect from the United States."
As a result of these developments, shares of French luxury brands fell. Shares in Hermes and Gucci owner Kering declined by 1.7% in Paris while LVMH, which produces both leather goods and champagne, fell by 1.9%.
According to tech trade group the Internet Association, the French tax was "one of a growing number of concerning unilateral tax regimes around the world." It pointed out: "Discriminatory digital services taxes act as a trade barrier for innovative American companies and small businesses often face the biggest burden from them."
France has assured that it would refund US companies the difference in tax between what it will collect and what companies will be required to pay under a comprehensive tax plan being developed at the Organization for Economic Cooperation and Development.
