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Earlier this year, Bruno Le Maire, France’s Finance Minister, warned the U.S. administration of a possible EU retaliation if it goes ahead with “disproportionate” trade tariffs.
As previously reported by ILM, the U.S. government has been considering overtaxing French products, such as leather handbags, since France announced the ‘Gafa tax’ on digital companies such as Google, Apple, Facebook and Amazon in 2019. The U.S. administration announced on July 12 that it would impose a 25% tariff on handbags and cosmetics within the next 180 days, unless both parties reach a satisfactory agreement. This new announcement follows a statement issued by Le Maire on July 11 in which he claims the Silicone Valley digital giants are 'escaping' taxes by locating their European headquarters in tax haven countries, such as Ireland and Luxembourg, to save corporation taxation. For instance, corporate tax rate in Ireland is 12.5% while Luxembourg offers 21% compared with 31% in France and 30% in Germany, countries that have a larger share of the consumer tech market.
Jon Gold, Vice President of Supply Chain and Customs Policy, U.S. National Federation of Retail (NRF), told Forbes magazine that while the federation oppose the Digital Service Tax as announced by France, it is disappointed with administration’s continued use of tariffs. “The U.S. should negotiate multilateral solutions and not place tariffs on U.S. imports, especially now as U.S. businesses and consumers are working through economic recovery from the coronavirus pandemic. Tariffs are taxes paid by U.S. companies and passed along to the U.S. consumer”, said Gold.