Donald Trump has opened two new fronts against supposed allies in his trade war. He announced on Monday that Brazil and Argentina would lose exemptions from higher tariffs on steel and aluminium. Most worrying, however, is the disclosure that France could face 100 per cent tariffs over its digital services tax, which aims to ensure tech companies — often American — pay their fair share of corporation tax.
These tariffs on French products, ranging from champagne to handbags, come despite the fact the US is also supporting an OECD initiative to change how companies are taxed. The Paris-based forum proposes a new “taxing right” for governments based on a company’s proportion of sales within their territory. It has encouraged the G20 group of large countries to come to an agreement by the end of January.
Given his love of a deal, Mr Trump’s decision to levy tariffs on French imports is surprising. In August, the two countries’ finance ministers agreed that France would give US companies a rebate on the difference between the taxes when the new OECD scheme was introduced. The tax is set at 3 per cent of revenue for companies with more than €25m of French sales and €750m of revenue worldwide.