Now the Roquefort: US eyes tariffs on $2.4 billion in French imports

The Trump administration is proposing tariffs on up to US$2.4 billion (NZ$3.7 billion) worth of French imports - including Roquefort cheese, handbags, lipstick and sparkling wine - in retaliation for France's tax on American tech giants like Google, Amazon and Facebook.

The Office of the US Trade Representative charged on Monday that France's new digital services tax discriminates against US companies. The trade office will accept public comments on the tariffs, which could hit 100 per cent, through January 6 and hold a hearing on January 7.

The French tax is designed to prevent tech companies from dodging taxes by putting headquarters in low-tax European Union countries. It imposes a 3 per cent annual levy on French revenues of digital companies with yearly global sales worth more than €750 million and French revenue exceeding €25m.

The US also criticised the French tax for targeting companies' revenue, not their profits, and for being retroactive.

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The Trump administration is proposing tariffs on up to US$2.4 billion worth of French imports, from Roquefort cheese to handbags.
BOB EDME/AP
The Trump administration is proposing tariffs on up to US$2.4 billion worth of French imports, from Roquefort cheese to handbags.

The decision to pursue tariffs "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies," US Trade Representative Robert Lighthizer said.

His agency investigated the French tax under Section 301 of the Trade Act of 1974 - the same provision the Trump administration used last year to probe China's technology policies, leading to tariffs on more than US$360b worth of Chinese imports in the biggest trade war since the 1930s.

Lighthizer warned that the US is also exploring whether to pursue Section 301 investigations into digital taxes introduced by Austria, Italy and Turkey.

The decision to target France got bipartisan endorsement from Iowa Republican Senator Chuck Grassley and Oregon Democratic Senator Ron Wyden. In a joint statement, they assailed the French digital tax as "unreasonable, protectionist and discriminatory."

US President Donald Trump has a mercurial approach to trade policy.
FRANK AUGSTEIN/AP
US President Donald Trump has a mercurial approach to trade policy.

The tech trade group ITI said it welcomed the administration's decision and urged continued negotiations on international taxes under the auspices of the Organisation for Economic Cooperation and Development.

The tariff announcement is likely to increase tension between the United States and Europe. The US is already readying tariffs on US$7.5b in EU imports over illegal subsidies for the European aircraft giant Airbus. The World Trade Organisation on Monday gave the US a green light to impose those levies, ruling that the EU had not complied with an order to end the subsidies.

And in another reminder that Washington's trade conflicts extend well beyond a 16-month standoff with China, US President Donald Trump on Monday pledge to slap tariffs on steel and aluminium from Brazil and Argentina.

The US is already readying tariffs on US$7.5b in EU imports over illegal subsidies for the European aircraft giant Airbus.
FRANCOIS MORI/AP
The US is already readying tariffs on US$7.5b in EU imports over illegal subsidies for the European aircraft giant Airbus.

Both South American nations were among a group of US allies that Trump exempted from steel and aluminium tariffs in March 2018. The American president's threat to reverse that decision and impose the metals tariffs is the latest example of his mercurial approach to trade policy.

Trump accused the countries of manipulating their currencies lower to make their exports less expensive in world markets and gain an unfair trade advantage.

But the countries' weak currencies reflect their weak economies. Brazil is contending with double-digit unemployment and economic stagnation after two years of deep recession. Argentina is battling an economic crisis marked by runaway inflation, huge debts and widespread poverty.

AP