United States President Donald Trump has threatened to slap a 100 per cent tariff on French wine and champagne unless Paris removes a digital services tax on tech firms, the New York Post reported on Monday.
Background of the Digital Services Tax
France imposed in 2019 a three per cent levy on the revenues earned by technology firms — including American giants such as Meta Platforms Inc., Amazon.com Inc., Apple Inc. and Google parent Alphabet Inc. — within the country’s borders.
Trump said he asked French President Emmanuel Macron “not to charge American companies,” according to the New York Post.
“If they do, I have no choice but to charge a 100 per cent tariff on all champagnes and all wines coming out of France,” he was quoted as saying.
“All (Macron) has to do is get rid of the sales tax, and he wouldn’t have that kind of pressure.”
Reaction from French Wine Industry
Gabriel Picard, president of the French Federation of Wine and Spirits Exporters (FEVS), called for preserving a “balanced and constructive trade relationship between France and the United States in the interest of both economies.”
The dispute “concerns issues that fall outside our scope of action, even though our companies could directly suffer the consequences… This new threat is bad news for our highly export-orientated sector,” Picard told AFP.
Impact on French Wine Exports
The United States is the biggest importing country for French wines and spirits, accounting for 21 per cent of the overall export market last year, according to the FEVS.
French and European wines exported to the U.S. already face a 15 per cent tariff — up from an earlier 10 per cent.
FEVS said the export of French wines and spirits to the U.S. slumped by 21 percent last year.
Previous Threats and Context
In January, Trump threatened 200-per cent tariffs on French wine over France’s intention to decline an invitation to join his “Board of Peace” aimed at resolving international conflicts.
Canada decided to scrap its digital services tax last year in order to salvage trade talks with the U.S., following pressure from Trump.
Proponents for special taxes on big tech firms argue that the goal is to force them to pay taxes where they carry out business, as well as to counter the tax optimization strategies.
During his first term Trump also threatened to slap tariffs on U.S. imports of champagne and French cheese.
French President Emmanuel Macron is due to host Trump on Monday before the G7 summit gets underway at the spa resort of Evian on Lake Geneva.
