The Trump administration announced on Monday that France’s Digital Services Tax (DST) discriminates against U.S. companies and that the U.S. will be responding to the digital tax by imposing up to a 100% tariff on billions of dollars of French products.
The Office of the United States Trade Representative (USTR) said France’s digital tax “discriminates against U.S. companies, is inconsistent with prevailing principles of international tax policy, and is unusually burdensome for affected U.S. companies. Specifically, USTR’s investigation found that the French DST discriminates against U.S. digital companies, such as Google, Apple, Facebook, and Amazon. In addition, the French DST is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalizing particular U.S. technology companies.”
The USTR said that since its report concluded that France’s digital tax was “unreasonable, discriminatory, and burdens U.S. commerce,” that it is issuing a Federal Register notice that includes adding up to a 100% tax on “63 tariff subheadings with an approximate trade value of $2.4 billion.”
“In determining the appropriate action, the U.S. Trade Representative may take account of the level of harm to the U.S. economy caused by France’s DST. USTR seeks public comments on the level of harm, including DST payments owed by U.S. companies, the annual growth rate of such payments, and other effects, such as compliance costs,” USTR wrote in the notice. “The Annex to this notice contains a preliminary list of 63 tariff subheadings, with an estimated import trade value for calendar year 2018 of approximately $2.4 billion. The U.S. Trade Representative proposes to draw a final list of products subject to additional duties from this preliminary list.”
Conclusion of USTR’s Investigation Under Section 301 into France’s Digital Services Taxhttps://t.co/r9XR6aZj5u pic.twitter.com/K56rbAxeDI
— USTR (@USTradeRep) December 2, 2019
Ambassador Robert Lighthizer said in a statement: “USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies. Indeed, USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey. The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies.”
The statement from the USTR comes as President Donald Trump is in Europe this week to attend a NATO meeting.
Trump tweeted: “In the 3 decades before my election, NATO spending declined by two-thirds, and only 3 other NATO members were meeting their financial obligations. Since I took office, the number of NATO allies fulfilling their obligations more than DOUBLED, and NATO spending increased by $130B!”
The Democrats scheduled public impeachment hearings this week in the House Judiciary Committee, knowing that Trump would be overseas.
White House counsel Pat Cipollone slammed Chairman Jerry Nadler for holding the hearing while Trump was not in the U.S., writing in a letter: “You scheduled this initial hearing-no doubt purposely-during the time that you know the President will be out of the country attending the NATO Leaders Meeting in London.”
Trump responded: “So the Democrats, the radical left Democrats, the do-nothing Democrats decided when I’m going to NATO, which was set up a year ago, that when I’m going to NATO that was the exact time.”