France and EU ready to respond to us threat of 'illegitimate' tariffs

By Sylvie Corbet, Associated Press

France has warned it will retaliate with the full backing of the European Union if the US imposes tariffs on up to 2.4 billion dollars (£1.8 billion) of French products, including Champagne, Roquefort cheese, handbags and lipstick.

The US is considering 100% tariffs on some French goods in response to France's decision to tax the local digital business of major tech companies like Google and Facebook.

With a decision on the tariffs expected in coming days, French finance minister Bruno Le Maire met EU trade chief Phil Hogan in Paris.

"We believe that the American project of sanctions against the French digital tax is unfriendly, inappropriate and illegitimate," Mr Le Maire said.

If US tariffs were imposed, "we would bring the case to the World Trade Organisation and we would be ready to react", he added.

Mr Hogan said the question of the digital tax is a "very major bone of contention with the United States" but the EU commission "will stand together with France".

France has since last year been imposing a 3% annual tax on revenues of digital companies with yearly global sales worth more than 750 million euros (£636 million) and French revenue exceeding 25 million euros (£21 million).

France is pushing for a global agreement on how to better tax digital operations, which are typically reported in the company's home country instead of the place where it does business.

Asked about potential retaliation measures, Mr Le Maire said France is considering "all options".

The US is expected to announce the potential tariffs by next week, but France called on the Trump administration to refrain from taking a decision while negotiations are ongoing at the Paris-based Organisation for Economic Co-operation and Development (OECD).

In a phone call with US Treasury secretary Steven Mnuchin on Monday, Mr Le Maire said the sides had agreed "to intensify efforts in the coming days to try to find a compromise".

In talks with Donald Trump last August, French President Emmanuel Macron vowed France would abandon its digital tax if an agreement to better tax digital businesses was found at the OECD, which comprises 134 countries.