President Donald Trump has told France to scrap its digital services tax or watch American tariffs on French wine and champagne hit 100%. The ultimatum, delivered through an interview with the New York Post, marks the sharpest escalation yet in a transatlantic trade fight that started seven years ago.
Trump said he had personally asked French President Emmanuel Macron to eliminate the tax.
A tax designed with Silicon Valley in mind
France first enacted its digital services tax in 2019 at a rate of 3%. The levy was designed to target large tech companies, specifically firms like Google, Amazon, Apple, and Meta, that generate significant revenue in France but structure their operations to minimize local tax obligations.
The tax immediately drew fire from Washington. The US argued it was discriminatory because it disproportionately affected American companies. The Trump administration’s first round of tariff threats in 2019 targeted French wine and luxury goods, but those measures were suspended while the OECD attempted to broker a multilateral agreement on how to tax digital businesses internationally.
