US threatens levy on French wine over tax on tech giants
Donald Trump said yesterday the US would hit France shortly with a "substantial reciprocal action" - and warned a new tax on French wine was possible - after Paris announced a tax that will hit US technology companies.
"If anybody taxes them, it should be their home Country, the USA. We will announce a substantial reciprocal action on Macron's foolishness shortly," Mr Trump tweeted, referring to French President Emmanuel Macron. "I've always said American wine is better than French wine!"
Later, Mr Trump told reporters the tax decision was wrong and he threatened the key French export.
"They shouldn't have done this," Mr Trump said. "I told them, I said, 'Don't do it because if you do it, I'm going to tax your wine.'"
He added a few minutes later that the US response would be announced soon and it "might be on wine, it might be on something else."
The United States is by far the largest single export market for French wine and spirits, France's second-biggest export after aerospace. The US in 2018 accounted for nearly a quarter of all French wine exports, or €3.2bn worth.
French Economy Minister Bruno Le Maire said in a statement after Mr Trump's tweet that "the universal taxation of digital activities is a challenge that concerns all of us. We want to reach a deal on this within the framework of the G7 and the OECD. In the meantime, France will move ahead with national decisions".
Two weeks ago, the French Senate approved the 3pc levy that will apply to revenue from digital services earned in France by firms with more than €25m in French revenue and €750m worldwide.
Other EU countries, including Austria, Britain, Spain and Italy, have also announced plans for digital taxes.
They say a levy is needed because big, multinational internet companies such as Facebook and Amazon are currently able to book profits in low-tax countries such as Ireland, no matter where the revenue originates. Political pressure to respond has been growing as local retailers on main streets and online have been disadvantaged.