U.S. vows 100% tariffs on French Champagne, cheese, handbags over digital tax

Global Corner

FILE PHOTO: An employee serves a glass of Champagne during the traditional wine harvest at the Champagne house Deutz in Ay, France, September 22, 2016. REUTERS/Benoit Tessier/File Photo

WASHINGTON (Reuters) – The U.S. government on Monday said it may slap punitive duties of up to 100% on $2.4 billion in imports of French Champagne, handbags, cheese and other products, after concluding that France’s new digital services tax would harm U.S. tech companies.

The U.S. Trade Representative’s 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 U.S. companies”, including Alphabet Inc’s Google (GOOGL.O), Facebook Inc (FB.O), Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O).

U.S. Trade Representative Robert Lighthizer said the U.S. 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 U.S. companies, whether through digital services taxes or other efforts that target leading U.S. 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% duties.

The list targets some products that were spared from 25% tariffs imposed by the United States over disputed aircraft subsidies, including sparkling wines, handbags and make-up preparations – products that would hit French luxury goods giant LVMH (LVMH.PA) and cosmetics maker L’Oreal (OREP.PA) hard.

The findings won favor from U.S. lawmakers and U.S. 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 spokeswoman for the French embassy in Washington could not immediately be reached for comment.

Reporting by Andrea Shalal And David Lawder; Editing by Leslie Adler and Lisa Shumaker

Our Standards:The Thomson Reuters Trust Principles.

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