France and the European Union are ready to retaliate if U.S. President Donald Trump acts on a threat to impose duties of up to 100 percent on 2.4 billion U.S. dollars in imports of champagne, handbags and other French products, the French government said on Tuesday.
File photo of Bruno Le Maire, France's finance minister, July 18, 2019. (Photo: VCG)
The threat of punitive tariffs came after a U.S. government investigation found France's new digital services tax would harm U.S. technology companies, and will intensify a festering trade dispute between Europe and the United States.
Speaking in London on Tuesday morning ahead of a NATO alliance summit, Trump said he would not allow France to take advantage of American companies and that the European Union treated the United States very unfairly on trade.
Any retaliatory action from France would have to be taken at an EU-wide level because the 28-nation bloc is a customs union, which applies duties at its border.
French Finance Minister Bruno Le Maire branded the U.S. threat unacceptable and said the French tax did not discriminate against American companies.
"In case of new American sanctions, the European Union would be ready to retaliate," Le Maire told Radio Classique.
He later told a press conference: "We are not targeting any country."
France's three percent levy applies to revenue from digital services earned by companies with more than 25 million euros (27.86 million U.S. dollars) of revenues from France and 750 million euros (830 million U.S. dollars) worldwide.
The French Parliament passed a new law on July 11 to impose a tax on digital giants, including U.S. companies Google, Amazon, Facebook and Apple, and its finance minister cited that the tax is necessary to make internet giants pay their fair share of taxes.
An investigation by the U.S. Trade Representative's office found the French tax was "inconsistent with prevailing principles of international tax policy."
It said the tax was "unusually burdensome" for U.S. companies including Alphabet Inc's Google, Facebook Inc, Apple Inc and Amazon.com Inc.
Shares in French luxury companies fell in response to the tariff threat against French champagne, handbags, cheeses and other products.
Hermes was around 1.9 percent lower, while LVMH and Kering fell by 1.3 percent and 1.2 percent respectively.