The French government passed a three per cent levy on digital companies that make more than US$850 million in annual revenue and at least US$28 million in the country in July. The president’s tweet promising “a substantial reciprocal action” mentioned French wine, but the White House did not elaborate on which products it would target in a follow-up statement. (Wall Street Journal)
Talking point: The statement marked an escalation of the fight between the U.S. and France over the tax. The Office of the U.S. Trade Representative is investigating the French policy under Section 301, which the administration also invoked to impose significant tariffs on China amidst the two countries’ trade negotiations. The U.S. duties on Chinese imports have hurt some of the same tech giants against which Trump says France’s tax unfairly discriminates. For example, Apple has asked for a waiver on the electronic components tariff for its Mac Pro. Also on Friday, Trump tweeted that he will not grant that exemption. Duties on France are less likely to directly affect the tech giants—the country’s top exports to the U.S. include aircraft components, liquor, medication and, yes, wine.