US President Donald Trump on Friday promised to retaliate against France for adopting a pioneering tax on Internet giants such as Google, Amazon and Facebook.
He also managed to get in a shot at French wine — Trump, who does not drink alcohol, tweeted: “I’ve always said American wine is better than French wine!”
The digital tax primarily targets companies that use consumer data to sell online advertising and is designed to stop multinationals from avoiding taxes by setting up headquarters in low-tax EU countries.
The companies pay nearly no tax in nations where they have significant sales.
If anyone taxes US technology companies, it should be their home country, Trump said, adding: “We will announce a substantial reciprocal action on [French President Emmanuel] Macron’s foolishness shortly.”
The French law does not specifically target US companies. It targets any digital company with yearly global sales worth more than 750 million euros (US$836.1 million) and French revenue exceeding 25 million euros.
The revenue threshold is supposed to allow more room for smaller companies to enter the market.
However, the Trump administration said that the services covered under the tax are ones in which US firms are global leaders.
US Trade Representative Robert Lighthizer earlier this month initiated an investigation to determine whether the tax is discriminatory or unreasonable, and whether it restricts US commerce.
Such a finding would allow Trump to levy retaliatory tariffs.
Asked if he would apply tariffs to French wines, Trump said: “I might, I might.”
Trump added that he has a good relationship with Macron and had just spoken with him.
“But they shouldn’t have done this. They’re used to taking advantage of the United States, but not with me as president,” he said.
The digital tax has also riled Republican and Democratic members of the US Congress. Leaders of the Senate Finance Committee have urged US Secretary of the Treasury Steven Mnuchin to explore increasing taxes on French subsidiaries in the US.
France failed to persuade EU partners to impose a Europe-wide tax on tech giants, but is now pushing for an international deal with the 34 nations of the Organisation for Economic Co-operation and Development.
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