President Trump recently announced that he would place tariffs on French products, particularly champagne and cheese, in retaliation to the French tax on US digital companies.
In an attempt to strike back, Bruno Le Maire, the finance minister of France, said that they were ready to go to the World Trade Organization (WTO) if Trump insists on putting tariffs on French goods.
The French government enacted a 3% levy on all revenue gained from France through digital services back in July. This only applies to digital firms with a global profit of $845 million or 25 million euros earned from revenue in France. The levy was implemented because Paris has been complaining regarding US digital companies that do not pay enough tax on revenues earned in France.
In an interview, Le Maire said that the levy was not discriminatory because the tax would be applied to the US digital companies in the same way as in the digital firms in the EU, France, or China. Clearly, the US government did not see it like that — hence the tariff threats from Trump. Now, Washington already fought back by threatening to put tariffs on French imports such as luxury handbags, cheeses, and champagne.
Le Maire also said that the French government was open for discussion in regards to the worldwide digital tax with the US at the Organisation for Economic Cooperation and Development (OECD). However, the said tax would be mandatory for digital firms. The finance minister added that it would be great if they made a deal at the OECD level as then they would finally have a global digital tax in place. If none, they would have to restart the discussion on the EU level.
France already proposed its version of the digital tax to other EU member states but met opposition from Denmark, Finland, Ireland, and Sweden. New EU Commissioner, Paolo Gentolini, assumed office on December 1st and has already proposed to restart talks regarding the digital tax.