French wine vs US tech prowess: new Trump-Macron standoff

France is pushing forward with a landmark tax on tech corporations like Google and Fb regardless of U.S. President Donald Trump’s threats of retaliatory tariffs on French wine.

That is rattling French vintners, who offered 1.6 billion euros ($1.78 billion) value of wine final yr to American customers. However neither Trump nor French President Emmanuel Macron seems able to again down.

After Trump slammed the “foolishness” of the tax in a tweet Friday and promised reciprocal motion, French Finance Minister Bruno Le Maire stated France will implement it anyway.

He insisted that the measure would not goal American corporations, and that “truthful and efficient taxation on digital actions” is of common concern. He stated France‘s tax is supposed as a brief measure pending negotiations on a global deal that France desires to work out “hand in hand with our American buddies.”

The three% tax that went into pressure this week primarily considerations corporations that use shopper knowledge to promote internet advertising.

It is designed to cease multinationals from avoiding taxes by establishing European headquarters in low-tax European Union nations. At the moment, corporations resembling Google, Amazon, Fb, Apple, Airbnb and Uber pay little or no tax on their vital enterprise in nations like France.

The Trump administration says the tax is discriminatory in opposition to U.S. enterprise.

The truth is, it targets any digital firm with yearly world gross sales value greater than 750 million euros ($835 million) and French income exceeding 25 million euros ($27 million). It ought to have an effect on about 30 corporations, primarily based within the U.S, China and Europe — together with France.

The income threshold is meant to permit extra room for startups. France argues that tech corporations are abusing their market dominance, notably by means of tax avoidance, and stopping others from a good probability of competing.

Additionally, the tax solely considerations revenues earned in France — not gross sales within the U.S. or elsewhere.

U.S. Commerce Consultant Robert Lighthizer started an investigation earlier this month to find out whether or not the tax is discriminatory or unreasonable and restricts U.S. commerce. Such a discovering would enable Trump to levy retaliatory tariffs.

Trump derided French wines in his tweet, and later stated he may hit them with retaliatory tariffs to French. He made the same risk final yr.

About 20% of French wine is offered within the U.S., and the Federation of French Wine and Spirits Exports on Saturday expressed concern about tariffs that would harm “French gamers on this market, but in addition their purchasers and American customers.”

The federation urged French and American authorities to pursue dialogue on the tax challenge, expressing hope “that they’ll shortly discover a path to observe to forestall these threats from materializing.”

Le Maire stated the U.S. “shouldn’t combine the 2 points,” and famous that European wines already face tariffs within the U.S. as do American wines in Europe. He hopes for a global deal by the tip of August.

Trump insisted Friday that he has a great relationship with Macron and had simply spoken with him.

After initially befriending the U.S. president regardless of their starkly completely different worldviews, Macron has more and more stood as much as the impulsive, America-first Trump on commerce, local weather change and Iran’s nuclear program.

The tech tax is simply their newest battleground, and might be a key rigidity level when the 2 males meet at a Group of Seven summit in France subsequent month.

France failed to influence EU companions to impose a Europe-wide tax on tech giants, however is now pushing for a global deal on it with the G-7 and the 34 nations of the Group for Financial Cooperation and Improvement.

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Jeffrey Schaeffer in Paris contributed.

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