AccSeemingly bored with the lack of tension and escalation in the trade war with China which is currently in ceasefire mode, the Trump administration has launched an investigation into French plans to impose a special tax targeting tech giants concern the levy unfairly targets American companies, which could lead to yet another front in the ever spreading US trade war, and result in the US imposing trade tariffs on Paris.
Late on Wednesday, US trade rep Robert Lighthizer, announced that the US will conduct a so-called Section 301 investigation into the tax, which it believes will be an unfair barrier to US exports. The move marks the first major confrontation as leading economies examine ways to tax the internet economy.
“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” said Lighthizer. “The President has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”
The digital services tax, which is up for a vote in the French senate on Thursday, would be set at 3% of the turnover of companies with digital business models and revenues of more than €750m globally and €25m in France.
As the WSJ report, the French proposal would likely be the first in a wave of proposed digital-services taxes to take effect in Europe, and will apply a 3% tax on revenue that companies like Google or Amazon.com reap in France from such activities as undertaking targeted advertising or running a digital marketplace.
According to the FT, the tax would affect about 30 companies, including US groups Alphabet, Apple, Facebook and Amazon, companies from China, Germany, Spain and the UK, and one French company: the advertising platform Criteo.
The US conducted a Section 301 investigation in 2017 before raising tariffs on China. Washington must first seek a negotiated settlement with Paris, though one person briefed on the administration’s plans said US officials were considering raising tariffs on French wine or cars if no agreement can be reached.
The French Senate is expected to vote Thursday on the final text of the bill, marking the final step before the law is enacted. U.S. lawmakers from both parties back an investigation into the French tax.
“The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S. jobs and harm American workers,“ said both the top Republican and top Democrat of the Senate Finance Committee, Sen. Chuck Grassley (R., Iowa) and Ron Wyden (D., Ore.), respectively, in a joint statement. ”The United States would not need to pursue this path if other countries would abandon these unilateral actions and focus their energies on the multilateral process that is underway at the Organisation for Economic Cooperation and Development.”