President Donald Trump is considering tariffs on French wines in response to the digital tax imposed by Paris that disproportionately targets U.S. tech companies. Earlier this month, the French Senate approved a 3 percent tax on sales generated from digital services in France by companies with more than 25 million euros in French revenue and 750 million euros worldwide.

The French measure unfairly targets U.S. tech companies, the Trump administration says. The tax, to be retroactively applied from January 2019, is expected to generate $400 million for the French government this year.

President Trump slammed French President Emmanuel Macron for levying the new tax, promising “a substantial reciprocal action on Macron’s foolishness” on Twitter. “They shouldn’t have done this,” President Trump told reporters. “I told them, I said, ‘Don’t do it because if you do it, I’m going to tax your wine.’ ”

The Reuters news agency reported President Trump’s comments:

Trump had told French President Emmanuel Macron last week that he was concerned about the proposed digital services tax.

“If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly,” Trump tweeted on Friday. “I’ve always said American wine is better than French wine!”

Later in the Oval Office, Trump told reporters the tax decision was wrong and he threatened the key French export.

“They shouldn’t have done this,” Trump said. “I told them, I said, ‘Don’t do it because if you do it, I’m going to tax your wine.’” (…)

Trump and Macron spoke by telephone on Friday and discussed the tax and next month’s summit of the Group of 7 rich nations in France, the White House said.

Macron’s office said the French leader “underlined that the G7 summit would be an important opportunity to move towards a universal taxation of digital activities, which is in our common interest, and which we need to keep working on in order to obtain a broad international agreement.”

The French government is alarmed by the prospect of higher tariffs on French wines, the country’s second-biggest export. “Please do not mix the two issues,” French Economy Minister Bruno Le Maire said Saturday. “The key question now is how we can get consensus on fair taxation of digital activities.”

More than 20 percent of all French wine produce is sold in the U.S., according to the trade body Federation of French Wine and Spirits Exports. In 2018, country’s wine exports to the U.S. exceeded $3.6 billion in sales.

President Macron does not want to limit the tax to France alone. He vowed to push for a global digital tax at the G7 summit, to be hosted in France next month. President Trump has rejected the French notion of taxing American tech firms operating abroad. “If anybody taxes” the U.S. tech giants, “it should be their home Country, the USA.” Trump said.

The French move could be a test case for a digital tax at the European Union-level, German public broadcaster Deutsche Welle suggested. Austria, Spain and the UK are also planning to impose similar taxes, the broadcaster added. President Trump’s tough stance towards France could deter a EU-wide tax regime targeting U.S. firms.

Video: ‘President Trump responds to France’s tax on American companies, might impose wine tax’

[Cover image via YouTube]


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