Believe it or not (and this is the Trump administration, so we’re pretty sure you’ll believe it), the US on Monday evening proposed slapping tariffs on some $2.4 billion in French goods in order to punish the country for a tech tax that drew the White House’s ire earlier this year.
Emmanuel Macron thought he had averted tariffs on French wine and other goods after the G-7 in Biarritz, but subsequent reports indicated the US was still pursuing a 301 probe into the digital services tax, which affects US titans including Facebook, Amazon and Google.
At the post-G-7 press conference in August, Macron suggested the dispute had been at least temporarily resolved. “We have reached a very good agreement”, he remarked.
But Trump was still mad, and on Monday, the USTR said this:
The U.S. Trade Representative has completed the first segment of its investigation under section 301 of the Trade Act of 1974 and concluded that France’s Digital Services Tax (DST) discriminates against U.S. companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies.
USTR is issuing a Federal Register notice explaining that, for the reasons set forth in the report, the French DST is unreasonable, discriminatory, and burdens U.S. commerce. The notice solicits comments from the public on USTR’s proposed action, which includes additional duties of up to 100 percent on certain French products. The notice also seeks comment on the option of imposing fees or restrictions on French services. The list of French products subject to potential duties includes 63 tariff subheadings with an approximate trade value of $2.4 billion.
There you go – more tariffs. And on a day when Trump lashed out at Brazil and Argentina in an irritated pre-dawn tweet announcing the resumption of metals duties on the countries, which the White House claims are “presiding over a massive devaluation of their currencies” to the detriment of US farmers. (In fact, both countries have attempted to halt FX depreciation.)
Over the summer, Trump recoiled at the notion that anyone other than him should be allowed to tax American tech companies. “France just put a digital tax on our great American technology companies”, Trump sighed, on July 26. “If anybody taxes them, it should be their home Country”, he went on to say, echoing sentiments expressed during an interview with Maria Bartiromo and adding that he intended to “announce a substantial reciprocal action on Macron’s foolishness shortly”. He then teased part of that “reciprocal action” by shrieking about American wine being “better than French wine!” (It’s not.)
The administration may not stop at France when it comes to the digital tax, either. “USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey”, Bob Lighthizer said on Monday evening.
“USTR is focused on countering the growing protectionism of EU member states”, Lighthizer went on to muse, unironically.
The 301 probe is the same type of investigation used to justify round after round of tariffs on China. After missing a deadline to decide on the imposition of auto tariffs under Section 232, the Trump administration is rumored to be considering a separate 301 investigation in order to justify more levies on the Europeans.
Among the French items that may be subjected to tariffs are sparkling wine, cheese, pedicure preparations, makeup and, of course, handbags “with outer surface of reptile leather”.