US proposes 100% tariffs on French goods over digital services tax

The Office of the United States Trade Representative proposed 100 per cent tariffs on French goods on December 2. The Trump administration published a notice concluding that France's digital services tax discriminate against the American technology and therefore, sought additional duties worth up to $2.4 billion including goods like champagne, yoghurt, cheese. All the items in the list will be targetted as soon as mid-January in response to the tax which penalizes companies like Google, Apple, Facebook, and Amazon. The USTR has issued a Federal Register notice explaining the reasons why the French tax is 'unreasonable, discriminatory, and burdens' US Commerce. 

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Escalations in trade tensions 

This recent plan has also marked an escalation in trade tensions between US and key allies as it came after US President Donald Trump announced tariffs on Brazil and Argentina. According to USTR Representative Robert Lighthizer, the USTR's decision will send a significant signal that Washington will take action against tax discrimination. He further elaborated, that the government is still exploring the possibilities if they should open an investigation into digital services taxes of Austria, Italy, and Turkey. 

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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 US 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”. 

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Trump announced the restoration of sanctions on steel and aluminium on Brazil and Argentina on December 2 'effective immediately'. Trump said that both the countries have been presiding over a 'massive devaluation of their currencies which is harming the American farmers. Trump's announcement was not immediately followed by the announcement of the Treasury or Commerce Departments or the Office of the United States Trade Representative. Argentina and Brazil, both were exempted from 25 per cent steel and 10 per cent aluminium tariffs in 2018 when Trump was trying to avoid a trade war with the countries. 

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(With agency inputs)