Trump warns of another year of trade tension

US threatens tariffs on French goods over digital tax

US proposes tariffs on French products following France's digital tax

"This is not the behavior we expect from the United States vis-a-vis one of its principal allies, France, and, in a general manner, Europe", Le Maire said, speaking on France's Radio Classique.

The United States on Monday threatened to impose duties of up to 100 percent on imports of champagne, handbags and other French products worth $2.4 billion after a U.S. government investigation found that France's new digital services tax would harm usa technology companies such as Google, Apple, Facebook and Amazon.

Le Maire repeated a promise to drop the French digital tax as soon as an agreement is found at the Organisation for Economic Cooperation and Development to overhaul decades-old worldwide tax rules.

Translated, Le Maire told the radio station: "If there are any new American sanctions, the European Union will be ready to hit back".

"They're starting to tax other people's products so therefore, we go and tax them", Trump said in London on Tuesday ahead of a North Atlantic Treaty Organisation alliance summit.

The threat of punitive tariffs followed a U.S. government investigation that found a new digital services tax in France would harm USA technology companies, and will intensify a festering trade dispute between Europe and the United States.

The US tariffs and the French tax are likely to be a priority during a meeting between Trump and Macron on the sidelines of a North Atlantic Treaty Organisation conference in London on Tuesday.

The Brazilian leader added he was confident he would receive a favorable hearing from the United States president.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies which is not good for our farmers", Trump tweeted, adding: "Therefore, effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the United States from those countries". It has always been a point of contention between Trump and French President Emmanuel Macron, who initially enjoyed a relatively drama-free relationship.

French wine and cheese are on the list of goods that could be targeted as soon as mid-January, as well as handbags, porcelain, yoghurt and other French products.

The USTR has claimed the tax - which is aimed at the top line of "digital companies with revenue of more than €750m" - discriminates against American companies.

Bruno Le Maire, speaking to a French broadcaster, said he's convinced the European Union will not sit idly by if the Trump administration imposes retaliatory tariffs of up to 100 percent on $2.4 billion in French exports.

The French tax is created to prevent tech companies from dodging taxes by putting headquarters in low-tax European countries.

On Monday, Mr Trump made a surprise announcement on Twitter that he would restore tariffs on Brazilian and Argentine steel and aluminium.

The US Trade Representative (USTR) launched an investigation and has concluded that the French law "discriminates" against US companies under Section 301 of the Trade Act of 1974, and therefore, is now soliciting public comments on proposed tariff changes.

LVMH, the maker of Louis Vuitton handbags and Moet & Chandon champagne, fell as much as 2.1 per cent in Paris trading, while makeup company L'Oreal SA lost as much as 1.4 per cent and leather-goods maker Hermes International declined 2.1 per cent. It warned that other countries that have introduced digital services taxes, including Italy, Austria and Turkey, could also face a similar investigation.

"If it's not going to be a good deal, I'm not signing a deal", he said.

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