France vows to retaliate over US sanctions

Paris – France yesterday warned the United States of strong EU retaliation if it imposed tariffs on key French products ranging from sparkling wine to cheese to handbags, in an intensifying row over taxing digital giants that risks spiralling into a new trade war.

The French parliament earlier this year infuriated the administration of President Donald Trump by passing a law taxing digital giants like Google, Apple, Facebook and Amazon for revenues earned inside the country.

Talks to resolve the issue amicably have so far failed and on Monday

the United States threatened to impose tariffs of up to 100% on $2.4 billion (about R35 billion) in French goods like sparkling wine, yoghurt and Roquefort cheese.

“We were in contact yesterday (Monday) with the European Union to ensure that if there are new American tariffs there will be a European response, a strong response,” said French Economy and Finance Minister Bruno Le Maire.

France, backed by Britain, argues that the digital giants must pay taxes on revenues accrued in a country even if their physical headquarters is elsewhere. But Washington fears that US companies have been singled out.

The dispute risks opening another front for the US in a succession of trade disputes. The US and China are already embroiled in a trade war and Trump said tariffs would be reinstated on Argentina and Brazil, accusing them of manipulating their currencies and hurting US farmers.

The decision “sends a signal that the US will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies”, US Trade Representative Robert Lighthizer said.