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US proposes tariffs on French products following France's digital tax

Trump administration says the tax rules discriminate against US companies.



The tax discriminates against US tech giants Apple, Amazon, Facebook and Google, the Trump administration says.

Angela Lang/CNET

The US has proposed a series of tariffs on some French products following an investigation into France's recently passed digital taxation laws. The tax discriminates against US companies, especially Google, Facebook, Apple and Amazon, according to the US Trade Representative. There are 63 tariffs suggested in total, with a trade value of around $2.4 billion.

"The United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies," Ambassador Robert Lighthizer said Monday. He added the US could investigate similar taxes by Austria, Italy and Turkey.

The proposed tariffs target French products across cheese, sparkling wine, perfume, handbags, yogurt, butter, beauty and makeup, manicure and pedicure, soap, porcelain, and bone china.

The USTR is accepting public comment until Jan. 6, 2020, with a public hearing to be held on Jan. 7. It'll then accept post-hearing rebuttals by Jan. 14.

On July 11, France's Senate passed the bill, creating a 3% tax on big tech companies providing services to French users. It could have a major impact on US giants like Apple, Facebook, Amazon and Google. France passed the taxation law a day after the Trump administration announced plans to investigate whether the planned digital tax amounts to an unfair trade practice by discriminating against US companies.

In July, Trump hinted that French wine could be subject to a new tariff thanks to what he called French President Emmanuel Macron's "foolishness" over the French taxation laws.

"France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the USA," Trump tweeted. "We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine!"

At the end of August, the US reportedly reached a deal with France over the law, with Macron telling reporters that US tech companies paying the tax would be able to deduct it.

The US investigation into France's new rules was conducted by Lighthizer, and was a 301 probe, the same kind that led to new tariffs on China last year.

While the tariffs have yet to be put in place, they're already having an effect on some French companies. 

With both Louis Vuitton handbags and Moët champagne facing tariffs, French luxury group LVMH owner Bernard Arnault lost $1.6 billion overnight after shares fell 1.5% during Tuesday trading in Paris, CNET sister site CBS News reported Tuesday. The company also makes and sells purses under the brands Bulgari, Christian Dior, Fendi and Marc Jacobs.

Originally published Nov. 2.
Update, Nov. 3: Adds detail from CBS News.