An ongoing dispute between France and the U.S. intensified on Tuesday, following a hearing in Washington D.C. on potential 100 percent tariffs on French wine, cheese, and other imported goods.
On Dec. 3, 2019, the Trump administration announced it was considering the tariffs after the Office of the U.S. Trade Representative (USTR) concluded that a French digital services tax discriminated against U.S. tech companies, including Amazon, Facebook, and Google.
Signed by French President Macron on July 24, 2019, the tax enables France to collect revenue from international tech companies in relation to business activities that take place within its borders.
The USTR subsequently concluded that the tax was discriminatory and unfairly targeted U.S. internet firms while sparing French companies. A hearing was then set for Tuesday Jan. 7, 2020, to discuss whether the U.S. should impose the proposed 100 percent retaliatory tariffs.
Though ostensibly a dispute between France and the U.S. over the operations of some of the world’s richest, largest tech companies, it’s small American businesses that find themselves in the firing line.
The digital services tax is imposed at a rate of “3 percent on the gross revenues derived from digital activities of which French ‘users’ are deemed to play a major role in value creation,” according to KPMG. In other words, it represents pocket change for the likes of Amazon, Google, and Facebook.
But the implications of the tariffs — on goods that have nothing to do with tech — could see thousands of U.S. job losses and the closure of numerous American businesses. Meanwhile, big tech is happy to see them burn and endorsed the tariffs during Tuesday’s hearing.
During the hearing, a spokesperson from the Computer and Communications Industry Association (CCIA), which represents the tech companies, urged the “USTR to use remedial tools at its disposal to deter France and to send a strong message to other countries who are finalizing or have proposed a similar national digital tax,” Politico reports.
Roughly two dozen wine wholesalers and retailers also testified at the hearing, according to Politico. The individuals argued that their businesses would be seriously harmed by the proposed duties.
In a letter to the USTR, a coalition of 10 wine groups argued that 100 percent tariffs on French wines would increase the cost to importers by $718 million, and could cause more than 17,000 job losses across the U.S. wine industry.
“We strongly urge the U.S. and France to reach a negotiated settlement in this dispute and avoid the implementation of new tariffs,” Barkley Stuart, executive director of Southern Glazer’s Wine and Spirits, said.
In Paris, senior U.S. and French officials are currently trying to reach that agreement ahead of the next World Economic Forum meeting, which takes place in Davos, Switzerland at the end of this month. The possibility of that happening seems highly unlikely, however, especially as the European Union is currently backing France in its dispute with the U.S.
VinePair reached out to the CCIA for comments on the proposed tariffs but has not received a response at the time of publishing.
For more information on this dispute, as well as a separate, unrelated set of tariffs that also threatens the U.S. wine industry, see VinePair’s in-depth coverage here.