Trump threatens new 100% tariff on French wine
As Trump touches down in France for a G7 summit, the US president claims he has “no choice” but to slap a 100% tariff on French wine imports unless Paris drops its 3% digital tax on American tech companies.
President Trump has demanded that French President Emmanuel Macron scrap a 3% tax on US tech giants, warning that unless the measure is removed he will have “no choice” but to apply a 100% tariff on “all Champagnes and all wines coming out of France.”
“I asked him not to charge American companies…” Trump told The New York Post. “All [Macron] has to do is get rid of the sales tax, and he wouldn’t have that kind of pressure.”
End of Iran war
Trump is due to land in France for a meeting with G7 leaders (15-17 June) to discuss next steps after a preliminary deal was reached to end America’s conflict with Iran. The US President has said that key global shipping route the Strait of Hormuz will re-open on Friday this week, a move that will alleviate some of the oil and gas stresses that drinks businesses have faced since the start of the war in February.
As db reported, many drinks companies were forced to bring in ‘force majeure’ clauses as a direct result of the conflict. However, one upshot is that the disruption to logistics has inspired firms to build more resilient and environmentally sustainable business models in case of future route stoppages.
Tariff rollercoaster
French wines and spirits exported to the US currently face a 15% tariff, which producers have been lobbying to have reduced, though it’s a significant drop from the earlier 200% tariff Trump threatened at the start of this year in retaliation for Macron saying he would decline an invitation to join Trump’s ‘Board of Peace’ initiative.
“I’ll put a 200% tariff on his wines and Champagnes, and he’ll join, but he doesn’t have to join,” Trump said in January, before adding: “Nobody wants him because he will be out of office very soon.”
Macron’s second five-year term ends in 2027 when a presidential election will take place in France. In accordance with French law, he is unable to stand for a third term in office.
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Tech tax
The GAFAM tax that Trump wants to see removed is a 3% levy on digital services paid by tech companies which earn more than €750 million gross revenue, with French sales of at least €25 million. The tariff, approved by French lawmakers in 2019, applies to major Silicon Valley players including the likes of Amazon, Apple and Meta (owner of Facebook, Instagram and What’s App), and according to the French finance ministry, generated $700 million last year alone.
Historically, the US government has viewed these taxes as discriminatory against American tech firms as the levy applies to gross revenue rather than net profits.
However, France says the distinction matters because there have been instances where major tech giants have allegedly exploited international tax laws by shifting intellectual property (algorithms, patents, software etc.) into tax havens, effectively slashing their taxable profit.
“Digital giants must pay a tax in France that is proportional to their activity,” said one French MP. “They have multiplied a number of legal tricks to ensure their turnover and profitability are not known”.
Roland Lescure, French minister for Economy, Finance, and Industrial, Energy, and Digital, previously warned that a “disproportionate” tax would invite “disproportionate” American reprisals such as the one Trump is now suggesting.
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