October 16, 2019

U.S. Announces Inquiry of French Digital Tax That May End in Tariffs

U.S. Announces Inquiry of French Digital Tax That May End in Tariffs

The investigation will be carried out under Section 301 of the Trade Act of 1974, a legal provision that gives the president broad authority to retaliate against trading partners. It is the same mechanism Mr. Trump has used to impose sweeping tariffs on China, as well as propose countermeasures against the European Union for allegedly subsidizing Airbus, the French aircraft manufacturer.

The measure will open yet another front in a global trade fight that the Trump administration says it has undertaken to level the playing field with both allies and adversaries. In his dealings with China, the European Union, Mexico, Canada, Japan and other countries, Mr. Trump has repeatedly turned to tariffs, viewing them as the best way to push trading partners to change their practices.

Robert Lighthizer, the Trump administration’s top trade negotiator, said in a statement that the United States was “very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies.”

“The president has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce,” Mr. Lighthizer said.

Major American tech companies, which opposed the French tech tax, cheered the investigation. Jordan Haas, the director of trade policy for the Internet Association, which represents the American industry, said the inquiry was “an important step in exercising American leadership to stem the tide of new discriminatory taxes across Europe.”

Facebook and Google declined to comment.

Lawmakers in the United States have also been critical of France’s push to tax tech companies.

“The digital services tax that France and other European countries are pursuing is clearly protectionist and unfairly targets American companies in a way that will cost U.S. jobs and harm American workers,” Senators Charles E. Grassley, Republican of Iowa, and Ron Wyden, Democrat of Oregon, said in a joint statement.

“We have urged the administration to consider all available tools to address this discriminatory action and applaud the U.S. trade representative for launching an investigation,” the senators said.

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