London Daily

Focus on the big picture.
Thursday, Oct 02, 2025

US mulls retaliation to French tech tax

US mulls retaliation to French tech tax

The US is preparing tariffs on $2.4bn (£1.85bn) worth of French exports as retaliation against the country's new digital services tax.

The top US trade official said the new tax, which France approved in July, unfairly targets American tech giants.

He said the potential tariffs were intended to deter other countries from taking similar steps.

The items that could face tariffs at rates up to 100% include cheese, sparkling wine, make-up and handbags.

The decision "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies", said US Trade Representative (USTR) Robert Lighthizer.


'Growing protectionism'

Mr Lighthizer announced the potential tariffs, which will now enter a public comment period, at the end of his office's investigation of the French tax.

It found that the law - which taxes turnover instead of profit - was inconsistent with international tax norms and "unusually burdensome" for US tech firms.

Mr Lighthizer said the US is exploring opening investigations into similar laws in Austria, Italy and Turkey. The UK has also taken steps towards a tech tax.

"The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets US companies, whether through digital services taxes or other efforts that target leading US digital services companies," he said.

France has long argued that taxes should be based on digital activity, not just where firms have their headquarters.

Its new law imposes a 3% tax on sales of certain digital services that happen within its borders. It applies to any digital company with revenue of more than €750m ($850m; £670m) - of which at least €25m is generated in France.

The tax will go into effect retroactively from early 2019 and is expected to raise about €400m this year.

About 30 companies are expected to pay it, mostly US firms such as Alphabet, Apple, Facebook, Amazon and Microsoft.

Amazon has already responded by raising fees for French businesses by 3%.

US tech companies say such laws force them to pay double tax. They say modernisation of tax rules should be an international effort, but those negotiations remain slow-going.

The French government, which announced its law after an EU-wide proposal stalled, has said the tax will end if a similar measure is agreed internationally.

Over the summer, President Donald Trump threatened to tax French wine over the issue - a plan that the French agriculture minister dismissed as "completely moronic".

But some US business lobby groups had warned against tariffs because of fears of escalating another trade fight, despite their opposition to the French law.

The US Chamber of Commerce, for example, said tariffs "may elicit additional rounds of retaliatory measures that represent a substantial risk to US economic growth and job creation".

This expected retaliation from the US could make troubling reading for the UK party leaders.

Labour Party leader Jeremy Corbyn's flagship election pledge - to give every home and business in the UK free full-fibre broadband by 2030 - was to be funded, at least in part, by a tax on "multinationals". In the party's press release about the plans last month, "Amazon, Facebook and Google" were mentioned specifically.

Prime Minister Boris Johnson has also backed the idea, calling out the so-called "FAANG" stocks - Facebook, Apple, Amazon, Netflix and Google - as paying "virtually nothing". The Tory manifesto pledges its own Digital Services Tax to fund improvements in broadband infrastructure, among other things.

Both leaders are capitalising on the growing momentum in Europe to tax tech firms based on their sales in a country - rather than profits, which are often funnelled through counties with a lower tax rate, such as Ireland.

But while promising a "Google tax" sounds great on the campaign trail, it only strengthens the view in Washington that American success stories are being unfairly targeted. And the move today suggests the US is ready to start fighting back.

Here's what might happen next: France has said it would drop its digital tax if Europe could, as a bloc, come up with an alternative that's consistent across the Union; a strength-in-numbers move that would be more difficult for the US to counteract. But the UK, post-Brexit, would be on its own - and needs to stay in Washington's good graces.

Newsletter

Related Articles

0:00
0:00
Close
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
FBI Removes Agents Who Kneeled at 2020 Protest, Citing Breach of Professional Conduct
Trump Alleges ‘Triple Sabotage’ at United Nations After Escalator and Teleprompter Failures
Shock in France: 5 Years in Prison for Former President Nicolas Sarkozy
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
BNP Paribas Abandons Ban on 'Controversial Weapons' Financing Amid Europe’s Defence Push
Typhoon Ragasa Leaves Trail of Destruction Across East Asia Before Making Landfall in China
The Personality Rights Challenge in India’s AI Era
Big Banks Rebuild in Hong Kong as Deal Volume Surges
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Arnault Denounces Proposed Wealth Tax as Threat to French Economy
Study Finds No Safe Level of Alcohol for Dementia Risk
Denmark Investigates Drone Incursion, Does Not Rule Out Russian Involvement
Lilly CEO Warns UK Is ‘Worst Country in Europe’ for Drug Prices, Pulls Back Investment
Nigel Farage Emerges as Central Force in British Politics with Reform UK Surge
Disney Reinstates ‘Jimmy Kimmel Live!’ after Six-Day Suspension over Charlie Kirk Comments
U.S. Prosecutors Move to Break Up Google’s Advertising Monopoly
Nvidia Pledges Up to $100 Billion Investment in OpenAI to Power Massive AI Data Center Build-Out
U.S. Signals ‘Large and Forceful’ Support for Argentina Amid Market Turmoil
Nvidia and Abu Dhabi’s TII Launch First AI-&-Robotics Lab in the Middle East
Vietnam Faces Up to $25 Billion Export Loss as U.S. Tariffs Bite
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Indonesia Court Upholds Military Law Amid Concerns Over Expanded Civilian Role
Larry Ellison, Michael Dell and Rupert Murdoch Join Trump-Backed Bid to Take Over TikTok
Trump and Musk Reunite Publicly for First Time Since Fallout at Kirk Memorial
Vietnam Closes 86 Million Untouched Bank Accounts Over Biometric ID Rules
×