US vows 100% tariffs on French Champagne, cheese, handbags over digital tax

[WASHINGTON] The US government on Monday said it may slap punitive duties of up to 100 per cent on US$2.4 billion in imports of French Champagne, handbags, cheese and other products, after concluding that France's new digital services tax would harm US tech companies.

The US Trade Representative's (USTR) office said its Section 301 investigation found that the French tax was "inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected US companies", including Alphabet's Google, Facebook, Apple and Amazon.com.

US Trade Representative Robert Lighthizer said the US government was also exploring whether to open similar investigations into the digital services taxes of Austria, Italy and Turkey.

"The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies."

The trade agency said it would collect public comments on its proposed tariff list through Jan 14 and hold a public hearing on Jan 7. It did not specify an effective date for the proposed 100 per cent duties.

The list targets some products that were spared from 25 per cent tariffs imposed by the US over disputed aircraft subsidies, including sparkling wines, handbags and make-up preparations - products that would hit French luxury goods giant LVMH and cosmetics maker L'Oreal hard.

The findings won favor from US lawmakers and US tech industry groups.

"The French digital services tax is unreasonable, protectionist and discriminatory," Senators Charles Grassley and Ron Wyden, the top Republican and Democrat, respectively, on the Senate Finance Committee, said in a joint statement.

A spokesman for the French embassy in Washington could not immediately be reached for comment.

REUTERS