Dec. 3 (UPI) — The United States said Monday it is considering slapping retaliatory tariffs of up to 100 percent on $2.4 billion in French exports after an investigation found that a new tax by the European nation unfairly targets U.S. tech companies.
Despite U.S. opposition, French President Macron signed legislation in July to apply the nation’s new Digital Services Tax, a 3 percent tax retroactively applied on gross revenue of large companies intended to modernize its tax system.
The U.S. Trade Representative said Monday it has completed an investigation into the DST and concluded that it discriminates against U.S. companies, specifically Google, Apple, Facebook and Amazon.
The USTR also said the new tax is inconsistent with prevailing tax principles as it was retroactively applied, imposed against revenue rather than income and its purpose is to penalize U.S. tech giants.
“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies,” Ambassador Robert Lighthizer said in a statement.
In response, the USTR issued a Federal Register Notice proposing additional tariffs, some as much as 100 percent, on French imports, including wine, makeup and handbags.
Jordan Haas, director of trade policy for the Internet Association, said the USTR was defending the Internet with its proposed retaliatory action against France.
“Discriminatory digital services taxes act as a trade barrier for innovative American companies and small businesses often face the biggest burden by them,” he said in a statement. “The French DST is one of a growing number of concerning unilateral tax regimes around the world, and we welcome the announcement from the USTR today.”
The move was also celebrated by Senate Finance Committee Chairman Chuck Grassley, R-Iowa, and ranking member Ron Wyden, D-Ore., who called the French digital tax in a joint statement “unreasonable, protectionist and discriminatory.”
“Taking premature action that will adversely and disproportionately affect another [Organization for Economic Co-operation and Development] member state is contrary to the organization’s goals and shouldn’t stand,” they said in reference to the wealthy nations’ organization both countries are members of. “We welcome this step from USTR on behalf of U.S. companies being unfairly targeted and harmed by the French tax.”
Lighthizer added that the USTR is considering conducting similar investigations against other EU states with applicable taxes such as Austria, Italy and Turkey.