The Trump administration is proposing tariffs on up to $2.4 billion worth of French imports, from Roquefort cheese to handbags, retaliation for France's tax on American tech giants like Google, Amazon and Facebook.
"France's Digital Services Tax (DST) discriminates against U.S. companies, is inconsistent with prevailing principles of global tax policy, and is unusually burdensome for affected U.S. companies", the U.S. Trade Representative says.
The proposed tariffs target French products across cheese, sparkling wine, perfume, handbags, yoghurt, butter, beauty and makeup, manicure and pedicure, soap, porcelain and bone china.
According to the USTR's notice of action against France's DST, written comments will be accepted for consideration until January 6, 2020, and a public hearing will take place the following day.
French Finance Minister Bruno Le Maire already said on French radio that such tariffs could lead to a "strong European riposte".
His agency investigated the French tax under Section 301 of the Trade Act of 1974 - the same provision the Trump administration used previous year to probe China's technology policies, leading to tariffs on more than $360 billion worth of Chinese imports in the biggest trade war since the 1930s.
Meanwhile, President Trump also said on Monday that the USA will restore tariffs on steel from Brazil and Argentina. In a separate press release, it also recommends new tariffs and says that there could be more investigations into the digital taxes of Austria, Italy and Turkey. "The USTR is focused on countering the growing protectionism of European Union member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies".
"I'm not in love with those (tech) companies, but they're our companies", Trump said Tuesday ahead of a sure-to-be-tense meeting with French President Emmanuel Macron in London.
The USTR report "concluded that France's Digital Services Tax (DST) discriminates against US companies, is inconsistent with prevailing principles of worldwide tax policy, and is unusually burdensome for affected US companies". "It's not the behavior we expect from the United States toward one of its main allies". In order to avoid tax optimization schemes, big tech companies that generate significant revenue in France are taxed on their revenue generated in France.
He also noted that France will reimburse the tax if the USA agrees to the global tax plan.
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 US dollars) of revenues from France and 750 million euros (830 million USA dollars) worldwide.
The threat of punitive tariffs came after a US government investigation found France's new digital services tax would harm USA technology companies, and will intensify a festering trade dispute between Europe and the United States.
President Trump also vowed to restore tariffs on steel from Brazil and Argentina.