The financial battle comes after the French government, led by President Emmanuel Macron, has declared its intention to start taxing the biggest tech giants in Silicon Valley. The move was critically important to Yellow Vest protesters who believe Google and Amazon are killing small businesses and posing serious privacy concerns. The GAFA tax (named after Google, Apple, Facebook and Amazon) would reduce revenue generated in France for technology companies based abroad by 3%.
The 25% additional duty on French imports is temporarily suspended and will remain so for 180 days, but will come into force in January if no resolution is established by then. By threatening the upside, the United States could harm some of the largest French conglomerates, including LVMH, Loreal, Kering and Hermès. The US administration considers any tax on its tech companies to be unreasonable, however “France’s response will be unchanged,” said the country’s finance minister, Bruno Le Maire, in Brussels this week. “If there is no international solution by the end of 2020, we will apply, as we have always said, our national tax.”
But this is not the only example in recent history where the United States has indicated the use of high tariffs on French imports. In October of last year, just a few months before the coronavirus became a pandemic, a 25% tariff was imposed on French wine and additional tariffs on French sparkling wine should be implemented in 2021.