President Donald Trump demanded to investigate the intended French tax on technology firm, which could become a reason for the introduction of new tariffs or other trade limitation by the USA.
U.S. Trade Representative Robert Lighthizer announced about the research saying that The United States is worried about the fact that the digital services tax, which will enter the French Senate tomorrow, is unjustly aimed at US companies.
Lighthizer has a year to find out if the plan for France’s digital taxes will harm US technology companies.
The research of Section 301 will show whether the collection is an unjust trade practice. Previous researches were conducted on Chinese trade practices and EU subsidies for big commercial aircraft.
According to French Finance Minister Bruno Le Maire, a 3% tax on French incomes of large Internet companies could bring 500 million euros (563 million dollars) per year.
Trump ordered to examine the influences of this legislation and to find out whether it is discriminatory or irrational, burdensome, or restricting trade in the United States.
According to Le Maire over 30 companies will be targeted by the tax, including not only American, German, Chinese, Spanish and British firms but also firms having French roots.
The tax will have a negative influence on firms with an annual income of at least 750 million euros (844 million dollars) and will apply to income from the digital business, including online advertising. Firms like Google Alphabet Inc (GOOGL.O), Apple Inc (AAPL.O), Facebook Inc (FB.O) and Amazon.com Inc (AMZN.O) will possibly be taxed.
Senate Finance Committee Chairman Chuck Grassley, a Republican, and Senator Ron Wyden, the top Democrat on the panel, applauded the research.
According to their statement the digital services tax, which France and other European countries levy, is obviously protectionist and unjustly targets US companies in ways that will cost American jobs and harm American workers.
It is also mentioned in the statement that the USA will not have to follow this journey if other countries withdraw from these one-sided moves and concentrate their efforts on the ongoing many-sided operation.