France threatens European Union retaliation over US's cheese tariff plan

Cornelia Mascio
Dicembre 3, 2019

Shares in French luxury companies fell in response to the tariff threat against French champagne, handbags, cheeses and other products.

On Monday, the U.S government said it may slap punitive duties of up to 100% on $2.4 billion (1.9 billion pounds) of imports from France of champagne, handbags, cheese and other products, after concluding that France's new digital services tax would harm United States tech companies.

The move is likely to increase trade tensions between the USA and Europe - and set the stage for a likely tense meeting Tuesday between President Donald Trump and French President Emmanuel Macron.

Earlier Monday, French Finance Minister Bruno Le Maire appeared to not have much confidence in the DST going over well with the Trump administration and predicted Washington was likely to respond with tariffs.

Le Maire said the French tech tax is aimed at "establishing tax justice".

The US has proposed a series of tariffs on some French products following an investigation into France's recently passed digital taxation laws.

France's junior economy minister Agnes Pannier-Runacher said on Tuesday: "It is very clear that we do not need to go back on this, with regards to a topic that economically speaking makes sense", referring to the digital tax.

The Office of the US Trade Representative says France's new digital services tax discriminates against US companies and says that the tariffs could reach 100%.

Le Maire disputes that, saying it targets European and Chinese businesses, too.

France's three percent levy applies to revenue from digital services earned by companies with more than 25 million euros (27.86 million USA dollars) of revenues from France and 750 million euros (830 million US dollars) worldwide.

"What we want is a plan for global tax that is on the table" at the Organization for Economic Cooperation and Development, Le Maire said. He added the USA could investigate similar taxes by Austria, Italy and Turkey.

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