The European Union will retaliate if the United States start to impose tariffs against France over its plan to tax digital companies with a so-called “digital tax,” warns Donald Tusk, president of the European Council during the G7 Meeting held at Biarritz in France.
Speaking to the reporters during the summit, Tusk said that the European Union would “respond in kind” if President Donald Trump pushes through with his previous threat that he will impose a tariff on French goods after Paris voted to impose a tax on companies who earn through “digital activities.”
France has voted to impose a 3% tax on tech companies who earn through digital operations that would impact big American tech giants like Facebook, Amazon, and Google. The tax applies to organizations with annual revenues of more than 750 million euros ($830 million) arising from “digital activities,” including 25 million euros ($27 million) made in France.
According to France, the measure would generate revenue for the country totaling 500 million euros every year. The move is similar to a previous EU proposal of levying a tax on tech companies. The EU failed to pass the proposal, but many countries in Europe like Italy, the United Kingdom, and Austria have already expressed their intention to legislate their own version of the digital tax.
President Donald Trump criticized the tax as an attack on the “great American companies” and threatened France of tariff imposition if they went on and continue with their digital tax plans.
Before leaving for the G-7 Summit last Saturday, Donald Trump said that while he is “not a fan” of tech companies, he said that “those are great American companies and frankly I don’t want France going out and taxing our companies.”
“And if they do that … we’ll be taxing their wine as they’ve never seen before,” he added.
On Monday, Trump said that France and the U.S. are close to a compromise deal to resolve the row between the two countries over the digital tax plans of France.