President Trump has announced that he is prepared to raise tariffs on French wines to 100%, in retaliation for France’s digital services tax, which the Trump Administration says discriminates against American internet companies.
According to The Washington Post, trade negotiator Robert E. Lighthizer released the results of a five-month investigation on Monday that recommended that French products, from cosmetics to cheese, should be hit with tariffs of up to 100%. The same article says that up to $2.4 billion worth of French goods are threatened.
The issue is that France is taxing companies like Facebook and Google, even though their European headquarters are located in other countries, like Ireland and Luxembourg. According to The New York Times, Lighthizer’s investigation concluded that the tax “discriminates against U.S. companies, is inconsistent with prevailing principles of international tax policy and is unusually burdensome for affected U.S. companies”.
Lighthizer may open similar investigations into Austria, Turkey and Italy, which also impose a digital tax. So far, Italian wines have escaped the US tariffs.
In October, the Trump administration hit French products, including wine, with a 25% tariff, over the Airbus dispute. Yesterday, the administration announced it was looking at broadening the range of punitive tariffs on European goods, because of this unresolved dispute.
Also see Jeff Siegel's analysis of how the existing tariffs are affecting the US wine market.
