Trump targets $2.4bn in French imports amid plans to restore tariffs on Brazil and Argentina

This article is more than 9 months old

This article is more than 9 months old

The Trump administration is proposing tariffs on up to $2.4bn-worth of French imports, including Roquefort cheese, lipstick, handbags and sparkling wine, in retaliation for France’s tax on US tech companies including Google, Amazon and Facebook.

The Office of the US Trade Representative (USTR) said an investigation had found France’s new digital services tax discriminated against US companies. It added that the tariffs could reach 100%.

The levy is designed to prevent tech firms from dodging taxes by putting headquarters in low-tax European countries. It would impose a 3% annual levy on French revenues of digital companies with yearly global sales worth more than €750m ($830m) and French revenue exceeding €25m ($27.7m).

The US also criticised the French tax for targeting companies’ revenue, not their profits, and for being retroactive.

The decision to pursue tariffs “sends a clear signal that the US will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies”, the USTR representative, Robert Lighthizer, said.

Trump to restore steel tariffs on Brazil and Argentina Read more

France warned the US on Tuesday of strong EU retaliation if it imposed tariffs.

“We were in contact yesterday with the European Union to ensure that if there are new American tariffs there will be a European response, a strong response,” the French economy and finance minister, Bruno Le Maire, told Radio Classique.

“This is not the sort of behaviour one expects from the United States with respect to one of its main allies, France, and to Europe in general,” Le Maire said, while adding that he wanted to avoid a pattern of “sanctions and retaliation”.

USTR investigated the French tax under Section 301 of the Trade Act of 1974 – the same provision the Trump administration used last year to look into China’s technology policies.

Lighthizer said the US was also exploring whether to pursue similar investigations into digital taxes introduced by Austria, Italy and Turkey.

USTR’s findings won favour from lawmakers on both sides of the aisle, as well as US tech industry groups.

“The French digital services tax is unreasonable, protectionist and discriminatory,” senators Chuck Grassley and Ron Wyden, the top Republican and Democrat on the Senate finance committee, said in a joint statement.

The announcement was part of a clutch of protectionist trade actions on Monday aimed at longtime US allies.

Earlier in the day, Trump announced his administration would restore tariffs on steel and aluminium from Brazil and Argentina. Both countries were among several US allies that Trump exempted from steel and aluminium tariffs in March 2018. On Monday, he accused them of lowering their currencies to make their exports less expensive in world markets and gain an unfair trade advantage.

“Brazil and Argentina have been presiding over a massive devaluation of their currencies. which is not good for our farmers,” Trump tweeted.

But the countries’ weak currencies reflect their weak economies. Brazil’s currency, the real, hit a record low last week and unemployment is above 10% after years of deep recession. Argentina is contending with inflation above 50% and widespread poverty.

USTR also announced it would review increasing tariffs on EU products and adding new tariffs because of a “lack of progress” in resolving a dispute over aircraft subsidies.

The office said a decision by the World Trade Organization on Monday affirmed the US position that European subsidies to Airbus continued to harm the US aerospace industry. The office did not provide specifics on what tariffs it might raise in the long-running dispute.