The Office of the United States Trade Representative (USTR) announced the results of the investigation on December 2, stating that the digital tax imposed by France on technology companies is unfair to the United States and threatens to impose a 100% tariff on French goods. On the same day, the WTO released a report saying that French Airbus received subsidies from EU countries and weakened the competitiveness of American Boeing. The United States was preparing to impose retaliatory tariffs on French Airbus.
Two pieces of news are worrying, and the US-European trade war bell may start again.
France passed rules in July that will levy a 3% digital tax on companies with online revenue in France of more than 25 million euros and a global total of 750 million euros. Although the rules apply globally, the world ’s largest technology companies such as Google, Facebook, Amazon, etc. are all from the United States, and more American companies will be affected.
However, it is not only France that intends to impose similar tariffs. Italy, Austria, Turkey, etc. also intend to impose similar tariffs. The United States launched an investigation into France, stating that France discriminated against U.S. science and technology companies, intends to levy tariff retaliation on French goods worth US $ 2.4 billion, and considers similar investigations in Italy and Austria.
France has stated that if the United States is willing to assist in the development of global harmonization measures under the leadership of the Paris-headquartered OECD, France will be willing to reduce related taxes. France has promoted digital taxation across the EU, but failed because of opposition from Sweden, Finland, Denmark and Ireland.
But at the same time there was a dispute between French Airbus and Boeing. The WTO released a report saying that French Airbus was subsidized by EU countries and weakened the competitiveness of American Boeing. Airbus and Boeing are the world’s two largest aircraft manufacturers. Both sides have accused each other of unfair competition through state subsidies. For example, Boeing lost a case in March.
However, the related ruling has made the already tight US-European trade relationship more tense, and the United States has stated that it will start procedures to impose tariffs on EU products. The magnitude of the levy is being assessed and more EU products are included in the tariff.
Although the latter is not directly related to the digital tax, both also stimulate the US government’s tariff retaliation policy. The United States’ trade tunes for European countries will continue one after another, and the US-European trade war alarm bells may start again.