US leader threatens wine tax in retaliation for France’s digital levy

WASHINGTON/PARIS • US President Donald Trump threatened to tax French wines on Friday in retaliation for France’s recent proposal to levy a tax aimed at big US technology companies.

Mr Trump had earlier told French President Emmanuel Macron he was concerned about the proposed digital services tax.

“If anybody taxes them, it should be their home country, the USA. We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine,” Mr Trump tweeted on Friday.

“They shouldn’t have done this,” Mr Trump told reporters later at the Oval Office. “I told them… ‘Don’t do it because if you do it, I’m going to tax your wine’.”

He said a few minutes later that the US response would be announced soon, saying that it “might be on wine, it might be on something else”.

Responding to Mr Trump’s threat, French Finance Minister Bruno Le Maire said yesterday that France would proceed with taxing revenues of big technology firms and urged the United States not to bring trade tariffs into the debate on how to fairly raise levies on digital services.

“It’s in our interest to have a fair digital tax,” Mr Le Maire told reporters in English.

“Please do not mix the two issues. The key question now is how we can we get consensus on fair taxation of digital activities.”

The US is, by far, the largest single export market for French wine and spirits, which are France’s second-biggest export after aerospace. Last year, the US accounted for nearly a quarter of all French wine exports, or €3.2 billion (S$4.9 billion) worth.

Two weeks ago, the French Senate approved the 3 per cent levy that will apply to revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million worldwide.

Meanwhile, Mr Trump has also rejected Apple’s bid to avoid tariffs on some computer parts it manufactures in China, saying the company should instead make the components in the US.

The technology giant has asked the Trump administration to exclude key components that make up the new Mac Pro desktop computer from 25 per cent import tariffs, weeks after planning to relocate production of the line to China from Texas.

The new Mac Pro will be manufactured in China, a person familiar with the firm’s plans said last month, shifting production of what had been Apple’s only major device assembled in the US.

Apple’s request for a tariff exemption confirms that plan.

Apple is also seeking duty exclusions on its Magic Mouse and Magic Trackpad, complementary devices for operating the computer, as well as an accompanying USB cable for charging external mobile devices.

Apple earlier had products spared from duties, including the Apple Watch and AirPods, while the iPhone, the company’s core product, has not yet been significantly impacted.


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