Would you still buy your favorite bottle of French wine if it cost twice as much? A battle between the White House and the French government over a tax on big technology companies has President Donald Trump threatening to impose high tariffs on French wine. That has French vignerons nervous.
The spat stems from a law French President Emmanuel Macron recently approved that imposes a 3 percent tax on the revenues of the world’s biggest tech firms. Retroactive to January, the measure affects companies with at least $845 million in global revenues and sales of $28 million in France.
European Union governments have been debating how to fairly tax revenues of foreign tech firms that do big business in their countries but pay very little taxes. While negotiations continue both within the E.U. and the Group of Seven (G7), the alliance of the seven biggest economies in the world, France has decided to impose its own tax for now.
French finance minister Bruno Le Maire insisted at a press conference on July 28 that the new tax is not anti-America. “The first point I want to make very clear to our American friends is that we are not targeting specifically American companies,” he told reporters. While most of the roughly 30 businesses affected are American, the list also includes Chinese, German, British and French companies.
But President Trump made it clear he opposes the tax, first in a tweet on July 26 and in comments to reporters later that day. “We tax our companies, they don’t tax our companies,” said Trump. “I’ve always liked American wines better than French wines, even though I don’t drink wine.” He said he may impose the wine tariffs before a meeting of the G7 in late August.
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U.S. Trade Representative Robert Lighthizer began an investigation earlier this month to determine whether France’s tax is discriminatory or unreasonable and restricts U.S. commerce. Such a finding would allow Trump to levy retaliatory tariffs.
While wine is a symbolic target, it’s also a frightening one for France: The U.S. is its biggest export market. French wineries exported 18 million cases of wine to the U.S. in 2017, worth more than $3 billion, according to Impact Databank, a sister publication of Wine Spectator.
This is not the first time wine has been caught in trade battle crosshairs. President Trump complained earlier this year about the European Union’s tariffs on American wine. The U.S. charges a tariff of 5 cents per bottle on imported still wine and 14 cents for sparkling wine, according to the Wine Institute, a trade organization. E.U. tariffs for imported wine range from 11 cents to 29 cents per bottle. And China has raised tariffs significantly on American wine as part of its trade disputes with the U.S.