France is pushing for the European Union to hit U.S. tech companies in response to U.S. President Donald Trump’s tariffs, in a move that would broaden the trade war to the vast services sector.
The EU, the U.S.’s largest trading partner, has vowed to retaliate after Trump announced a 20% tariff on the bloc’s exports in his bid to dismantle the global trading system.
“The mechanism and products concerned are not yet decided, it’s a discussion taking place between EU members,” French government spokeswoman Sophie Primas said on RTL radio. “But we will also attack services — services are for example digital services, which are not taxed today and could be.”
Expanding the transatlantic trade conflict to US tech services companies would mark an escalation likely to exacerbate tensions. French President Emmanuel Macron has previously flagged that while the US has a deficit with the EU in terms of goods, it runs a large surplus in services.
France has already clashed with Trump after it implemented a national tax on digital services in 2019, hitting the largest multinationals like Alphabet Inc.’s Google and Meta Platforms Inc.
But the issue has split the EU in the past with a handful of countries including Italy and Spain following France, while others, including Germany, traditionally opposed to the idea.
It’s hard for the EU to respond as one using taxation, which is a national prerogative and would require unanimous agreement among its 27 members.
Primas said responses to Trump that could hit services would probably be ready by the end of April. She mentioned the EU’s anti-coercion instrument — a tool designed to strike back against nations that use trade and economic measures coercively.
“We have given ourselves new tools in Europe that we call anti-coercion tools,” she said. “We have a battery of tools and are ready for this trade war.”
Countries already deploying digital services taxes complained in 2019 that global tech companies were not paying their fair share of tax in places where they generate vast revenues. Trump responded that DST unfairly discriminated against American firms and threatened tariffs in response, including against iconic French goods such as cheese, sparkling wine and handbags.
The two sides ultimately negotiated a truce, according to which countries would withdraw their DST once new global rules on taxing digital multinationals came into effect. However, the negotiations on those rules never concluded.
In the meantime, the levies are becoming a significant source of revenue for some governments. In France, the annual take reached €700 million ($756 million) in 2023.
A divergence between how different EU countries tax tech also creates a challenge for the bloc. In France, the 3% levy hits an array of activities including targeted advertising and data sales, while Poland’s version is limited to video-on-demand platforms.
In the meantime, member states are assessing the impact of Trump’s announcement and starting to plan for the EU’s next steps.
“This is very bad news for the Netherlands and the EU,” Dutch Foreign Trade Minister Reinette Klever told reporters on Thursday. “We are preparing a package of measures, and will not hesitate to deploy them.”
--With assistance from Saim Saeed and Patrick Van Oosterom.
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