Beautiful Virgin Islands

Tuesday, Jun 03, 2025

US mulls retaliation to French tech tax

US mulls retaliation to French tech tax

The US is preparing tariffs on $2.4bn (£1.85bn) worth of French exports as retaliation against the country's new digital services tax.

The top US trade official said the new tax, which France approved in July, unfairly targets American tech giants.

He said the potential tariffs were intended to deter other countries from taking similar steps.

The items that could face tariffs at rates up to 100% include cheese, sparkling wine, make-up and handbags.

The decision "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies", said US Trade Representative (USTR) Robert Lighthizer.


'Growing protectionism'

Mr Lighthizer announced the potential tariffs, which will now enter a public comment period, at the end of his office's investigation of the French tax.

It found that the law - which taxes turnover instead of profit - was inconsistent with international tax norms and "unusually burdensome" for US tech firms.

Mr Lighthizer said the US is exploring opening investigations into similar laws in Austria, Italy and Turkey. The UK has also taken steps towards a tech tax.

"The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies," he said.

France has long argued that taxes should be based on digital activity, not just where firms have their headquarters.

Its new law imposes a 3% tax on sales of certain digital services that happen within its borders. It applies to any digital company with revenue of more than €750m ($850m; £670m) - of which at least €25m is generated in France.

The tax will go into effect retroactively from early 2019 and is expected to raise about €400m this year.

About 30 companies are expected to pay it, mostly US firms such as Alphabet, Apple, Facebook, Amazon and Microsoft.

Amazon has already responded by raising fees for French businesses by 3%.

US tech companies say such laws force them to pay double tax. They say modernisation of tax rules should be an international effort, but those negotiations remain slow-going.

The French government, which announced its law after an EU-wide proposal stalled, has said the tax will end if a similar measure is agreed internationally.

Over the summer, President Donald Trump threatened to tax French wine over the issue - a plan that the French agriculture minister dismissed as "completely moronic".

But some US business lobby groups had warned against tariffs because of fears of escalating another trade fight, despite their opposition to the French law.

The US Chamber of Commerce, for example, said tariffs "may elicit additional rounds of retaliatory measures that represent a substantial risk to US economic growth and job creation".

This expected retaliation from the US could make troubling reading for the UK party leaders.

Labour Party leader Jeremy Corbyn's flagship election pledge - to give every home and business in the UK free full-fibre broadband by 2030 - was to be funded, at least in part, by a tax on "multinationals". In the party's press release about the plans last month, "Amazon, Facebook and Google" were mentioned specifically.

Prime Minister Boris Johnson has also backed the idea, calling out the so-called "FAANG" stocks - Facebook, Apple, Amazon, Netflix and Google - as paying "virtually nothing". The Tory manifesto pledges its own Digital Services Tax to fund improvements in broadband infrastructure, among other things.

Both leaders are capitalising on the growing momentum in Europe to tax tech firms based on their sales in a country - rather than profits, which are often funnelled through counties with a lower tax rate, such as Ireland.

But while promising a "Google tax" sounds great on the campaign trail, it only strengthens the view in Washington that American success stories are being unfairly targeted. And the move today suggests the US is ready to start fighting back.

Here's what might happen next: France has said it would drop its digital tax if Europe could, as a bloc, come up with an alternative that's consistent across the Union; a strength-in-numbers move that would be more difficult for the US to counteract. But the UK, post-Brexit, would be on its own - and needs to stay in Washington's good graces.

Newsletter

Related Articles

Beautiful Virgin Islands
0:00
0:00
Close
China Accuses US of Violating Trade Truce
Panama Port Owner Balances US-China Pressures
France Implements Nationwide Outdoor Smoking Ban to Protect Children
German Chancellor Merz Keeps Putin Guessing on Missile Strategy
Mandelson Criticizes UK's 'Fetish' for Abandoning EU Regulations
British Fishing Boat Owner Fined €30,000 by French Authorities
Dutch government falls as far-right leader Wilders quits coalition
Harvard Urges US to Unfreeze Funds for Public Health Research
Businessman Mauled by Lion at Luxury Namibian Lodge
Researchers Consider New Destinations Beyond the U.S.
53-Year-Old Doctor Claims Biological Age of 23
Trump Struggles to Secure Trade Deals With China and Europe
Russia to Return 6,000 Corpses Under Ukraine Prisoner Swap Deal
Microsoft Lays Off Hundreds More Amid Restructuring
Harvey Weinstein’s Publicist Embraces Notoriety
Macron and Meloni Seek Unity Despite Tensions
Trump Administration Accused of Obstructing Deportation Cases
Newark Mayor Sues Over Arrest at Immigration Facility
Center-Left Candidate Projected to Win South Korean Presidency
Trump’s Tariffs Predicted to Stall Global Economic Growth
South Korea’s President-Elect Expected to Take Softer Line on Trump and North Korea
Trump’s China Strategy Remains a Geopolitical Puzzle
Ukraine Executes Long-Range Drone Strikes on Russian Airbases
Conservative Karol Nawrocki wins Poland’s presidential election
Study Identifies Potential Radicalization Risk Among Over One Million Muslims in Germany
Good news: Annalena Baerbock Elected President of the UN General Assembly
Apple Appeals EU Law Over User Data Sharing Requirements
South Africa: "First Black Bank" Collapses after Being Looted by Owners
Poland will now withdraw from the EU migration pact after pro-Trump nationalist wins Election
"That's Disgusting, Don’t Say It Again": The Trump Joke That Made the President Boil
Trump Cancels NASA Nominee Over Democratic Donations
Paris Saint-Germain's Greatest Triumph Is Football’s Lowest Point
OnlyFans for Sale: From Lockdown Lifeline to Eight-Billion-Dollar Empire
Mayor’s Security Officer Implicated | Shocking New Details Emerge in NYC Kidnapping Case
Hegseth Warns of Potential Chinese Military Action Against Taiwan
OPEC+ Agrees to Increase Oil Output for Third Consecutive Month
Jamie Dimon Warns U.S. Bond Market Faces Pressure from Rising Debt
Turkey Detains Istanbul Officials Amid Anti-Corruption Crackdown
Taylor Swift Gains Ownership of Her First Six Albums
Bangkok Ranked World's Top City for Remote Work in 2025
Satirical Sketch Sparks Political Spouse Feud in South Korea
Indonesia Quarry Collapse Leaves Multiple Dead and Missing
South Korean Election Video Pulled Amid Misogyny Outcry
Asian Economies Shift Away from US Dollar Amid Trade Tensions
Netflix Investigates Allegations of On-Set Mistreatment in K-Drama Production
US Defence Chief Reaffirms Strong Ties with Singapore Amid Regional Tensions
Vietnam Faces Strategic Dilemma Over China's Mekong River Projects
Malaysia's First AI Preacher Sparks Debate on Islamic Principles
White House Press Secretary Criticizes Harvard Funding, Advocates for Vocational Training
France to Implement Nationwide Smoking Ban in Outdoor Spaces Frequented by Children
×