In an unusual move that threatens to worsen trade tensions with Europe, the Trump administration said it will investigate whether a proposed French tax on tech companies discriminates against U.S. business, a step that could lead Washington to impose trade penalties.
"The fact that these companies pay less tax than a cheese producer in Quercy is a real problem", French Finance Minister Bruno Le Maire, a vocal proponent of the measure, said in an April 3 interview with Le Parisien. The 301 investigation - the same type of probe that led to tariffs on China a year ago - raises the possibility of the U.S. imposing new tariffs. The United States and the EU have threatened to impose billions of dollars of tit-for-tat tariffs on planes, tractors and food in a almost 15-year dispute at the World Trade Organization over aircraft subsidies given to US planemaker Boeing Co (BA.N) and its European rival, Airbus SE (AIR.PA).
He said in a statement that "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".
USTR said in a statement the "services covered are ones where USA firms are global leaders".
Le Maire said the tax would target some 30 companies, mostly American but also Chinese, German, Spanish and British, as well as one French firm and several firms with French origins that have been bought by foreign companies.
The White House is launching an investigation into France's proposed tax on internet giants like Google, Amazon and Facebook - a move that could lead to US taxes on French imports. "France is a sovereign country".