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The U.S. has opened an investigation into a new French tax on digital services. The White House says the tariffs unfairly target American tech companies. The French hope their new tax will encourage other countries to take on big tech, but there are concerns that all of it could spark a trade war between France and the U.S. Jake Cigainero reports from Paris.
JAKE CIGAINERO, BYLINE: Previous U.S. investigations into Chinese and European Union trade practices have led the White House to impose retaliatory tariffs. President Trump criticized the new digital tax a day before the French Senate voted on the measure, but it passed anyway.
Google, Amazon, Facebook and Apple - or GAFA, as the French call the group of American tech giants - are among the companies France will slap with a tax bill. Digital companies that make 25 million euros a year in France and 750 million globally will have to pay a 3% percent tax on revenue.
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BRUNO LE MAIRE: (Speaking French).
CIGAINERO: The French finance minister, Bruno Le Maire, defending the new policy at the Senate said allies should settle disputes other than by threat. Le Maire said France will abolish the digital tariff once there are multilateral agreements to tax tech giants globally.
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LE MAIRE: I call on the U.S. administration and my counterpart Steven Mnuchin to accelerate the job that we are currently making within the G-7 and within the OECD to find an international solution on digital taxation.
CIGAINERO: The French government estimates it will rake in up to 650 million euros a year. Even if big tech companies have offices in France, they have largely avoided paying taxes here by establishing European headquarters in countries with low corporate tax rates such as Ireland and the Netherlands.
France has previously tried to spearhead a digital tax at the European Union level but hit some roadblocks with a few reluctant member states that offer attractive deals. The French digital tax is the first in Europe, but Great Britain, Spain and Austria are also developing similar policies. The new tax could be one more point of tension at upcoming G-7 meetings in France. For NPR News, I'm Jake Cigainero in Paris. Transcript provided by NPR, Copyright NPR.