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France and EU ready with ‘strong response’ to US tariff threats

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French Economy Minister Bruno Le Maire said that Paris is ready with a ‘strong response’.

After the US government threatened to impose up to 100 percent tariff on goods from France, amounting to $2.4 billion, French Economy Minister Bruno Le Maire said that  Paris is ready with a ‘strong response’.

On Tuesday, Le Maire told Radio Classique, “We were in contact yesterday with the European Union to ensure that if there are new American tariffs there will be a European response, a strong response.”

US government’s announcement of new tariffs on French imports came just hours before US President Donald Trump was due to meet French President Emmanuel Macron on the sidelines of the NATO summit in London on Tuesday. The tariff was proposed in response to France’s new digital services tax which mainly targeted US technology companies.

The US Trade Representative’s office said that as per the investigations carried out under “Section 301”, it was concluded that France’s digital tax was ‘inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies’. The US tech giants including Alphabet Inc’s Google (GOOGL.O), Facebook Inc (FB.O), Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O) came under the ambit of new French tax.

Lighthizer said, “The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies.” Lighthizer added that the decision “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies”. 

The USTR department has also been exploring the option of investigating the digital services taxes imposed by Austria, Italy, and Turkey.

The list of French goods, which might get taxed as per the new tariff proposal, included wine, champagne, cosmetics, porcelain, soap, handbags, butter, and several kinds of cheeses, including Roquefort, Edam, and Gruyere.

The furious French government called US threats unacceptable. Le Maire said, “This is not the sort of behavior one expects from the United States with respect to one of its main allies, France, and to Europe in general.”

The French digital service tax was imposed earlier this year, charging three percent of the revenue earned by foreign technology firms operating in France. The tax was imposed on companies with at least 750 million euros ($830 million) as annual global revenue on their digital activities.

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