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France threatens EU retaliation over US’s cheese tariff plan

Tuesday warned the United States of strong EU if it imposed on key French products ranging from sparkling wine to to , in an intensifying row over taxing digital giants that risks spiralling into a new trade war.

Published December 03,2019

France's finance minister is threatening a "strong European riposte" if the Trump administration follows through on a proposal to hit French cheese, Champagne, handbags and other products with tariffs - of up to 100%.

The U.S. Trade Representative proposed the tariffs on $2.4 billion in goods Monday in retaliation for a French tax on global tech giants including Google, Amazon and Facebook.

The move is likely to increase trade tensions between the U.S. and Europe - and set the stage for a likely tense meeting Tuesday between President Donald Trump and French President Emmanuel Macron.

"It's simply unacceptable," French Finance Minister Bruno Le Maire said Tuesday on Radio Classique. "It's not the behavior we expect from the united states toward one of its main allies."

Le Maire said the French tech tax is aimed at "establishing tax justice." France wants digital companies to pay their fair share of taxes in countries where they make money and is pushing for an international agreement on the issue.

While insisting that a trade war is "not in anyone's interest," Le Maire said France talked this week with the European Commission about EU-wide retaliatory measures if Washington follows through with the tariffs next month.

The U.S tariffs could double the price American consumers pay for French imports and would come on top of a 25% tax on French wine imposed last month over a separate dispute over subsidies to Airbus and Boeing.

The Office of the U.S. Trade Representative charged Monday that France's new digital services tax discriminates against U.S. companies.

Le Maire disputes that, saying it targets European and Chinese businesses, too. The tax imposes a 3% annual levy on French revenues of any digital company with yearly global sales worth more than 750 million euros ($830 million) and French revenue exceeding 25 million euros.

"What we want is a plan for international tax that is on the table" at the Organization for Economic Cooperation and Development, Le Maire said.

The U.S. investigated the French tax under Section 301 of the Trade Act of 1974 — the same provision the Trump administration used last year to probe China's technology policies, leading to tariffs on more than $360 billion worth of Chinese imports in the biggest trade war since the 1930s.