US threatens 100% tariffs on French goods over digital tax

The Trump administration on Monday proposed the imposition of 100 per cent tariffs on up to $2.4bn of French goods, including champagne, after concluding that the country’s digital services tax unfairly discriminated against American technology companies. The plan came at the end of a day marked by escalations in trade tensions between the US and key allies, starting with an announcement that Washington would restore tariffs on metals from Argentina and Brazil to punish them for their currency policies.
In addition, the US trade representative’s office said it was looking at broadening a range of punitive tariffs on EU products, including goods from the UK, France, Spain and Germany, because of subsidies to Airbus, the aircraft maker, that have been judged as illegal by the World Trade Organization. Shares in the Asia-Pacific region tumbled after the announcement, with Australia’s S&P/ASX 200 falling 2.3 per cent in morning trading as mining companies were hit by the latest potential disruption to global trade. The Hang Seng index was down as much as 1.4 per cent and was down 0.2 per cent by the lunchtime break in trading. The CSI 300 of Shanghai and Shenzhen-listed stocks was flat by early afternoon and Tokyo’s Topix lost 0.5 per cent.
Early on Tuesday, French finance minister Bruno Le Maire called the Trump administration’s latest threat “unacceptable” and said the EU would retaliate with “a strong riposte”.
 “If there should be new sanctions from the Americans, the EU is ready to retaliate,” Mr Le Maire said on Radio Classique. The US proposals, he said, were not actions worthy of an ally. “It’s in no one’s interest, it’s not in the interest of growth, or of political stability,” he said. The new tariffs on French goods follow months of complaints in Washington about the digital services tax introduced by the government of President Emmanuel Macron, which targets companies such as Google, Apple, Amazon and Facebook. The French tax was levied because of concerns that US technology groups were unfairly avoiding taxes on many digital transactions, and was pitched as a stop-gap measure until new rules could be approved on a multilateral basis through the OECD. Tensions over the digital tax have added to the strains between Donald Trump, the US president, and Mr Macron. At the G20 summit in Biarritz in August, the US had offered French officials a three-month reprieve from any action but that has since run out.