French Wine Gets Caught Up In France's New Tax On Big Tech At the G7 Summit, President Trump declined to say if he had backed down from his threat to place tariffs on French wine in retaliation for that country's new tax on digital giants.

French Wine Gets Caught Up In France's New Tax On Big Tech

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At the G-7 summit, President Trump wouldn't say if he'd back down from his threat to go after France's most beloved export, wine, in retaliation for France's new digital tax on big tech companies. NPR's Aarti Shahani has the story.

AARTI SHAHANI, BYLINE: Earlier this summer, France passed a new 3% tax on the revenues of big, mostly American, tech companies. Trump shot back with a tweet - quote, "if anybody taxes them, it should be their home country, the U.S.A. We will announce a substantial reciprocal action on Macron's foolishness shortly. I've always said American wine is better than French wine." He reportedly toyed with the idea of a 100% tariff on French wine.

Yesterday Trump and French President Emmanuel Macron had to face each other at a G-7 press conference.


PRESIDENT EMMANUEL MACRON: (Through interpreter) There was a lot of nervousness because of misunderstanding.

SHAHANI: Macron, with a voice-over, striking a conciliatory tone.


MACRON: (Through interpreter) Well, we have reached a very good agreement.

SHAHANI: The U.S. government has criticized France for acting alone instead of reaching a multilateral accord. After all, digital trade is a global issue. Many companies sell services across borders but headquarter themselves in low-tax countries like Ireland. Macron praised U.S. and French negotiators for reaching the very good agreement, and he elaborated on one detail. If and when the global community of nations can strike a deal, France will toss out their law and give refunds.


MACRON: (Through interpreter) And everything that has already been paid under the French tax system will be reimbursed.

SHAHANI: Amazon has called France's law discriminatory for targeting American giants and leaving most French companies, which are much smaller, out of the crosshairs. Google says unilateral action is a race to the bottom. The purported new agreement to refund down the line gives little comfort to the big tech lobby.

JASON OXMAN: That doesn't provide the kind of tax certainty that we're looking for.

SHAHANI: Jason Oxman, chief of ITI, a tech lobbying group whose members include Amazon, Google, Facebook, Microsoft and Apple.

OXMAN: It certainly doesn't provide a reason for countries not to move forward with unilateral digital taxes as France has done; in fact, it provides the opposite - an incentive for them to do so.

SHAHANI: Lobbyist Oxman fears a domino effect. The U.K. and Italy are looking to pass similar digital tax bills. He says the world is at risk of a patchwork that is irreversible, even more tightly knit because money has traded hands from tech coffers to government treasuries. That said, his group is not asking for retaliation against Bordeaux or merlots or pinots or even chardonnays.

OXMAN: We would rather have the underlying tax issues resolved. That's the goal we're pursuing.

SHAHANI: France, like China, is now in the U.S. crosshairs. The Trump administration has moved to investigate the French law for potential violation of international covenants and treaties. But the first lady has undermined her husband's hard-line stance. While he doesn't drink, she was spotted at the G-7 sipping French, not American, wine. At the G-7 presser, a journalist asked President Trump point-blank if he'd drop the 100% tariff threat.


PRESIDENT DONALD TRUMP: I can confirm that the first lady loved your French wine, OK?


TRUMP: All right? She loved your French wine. So thank you very much.

SHAHANI: U.S. officials have yet to confirm the agreement that France's president discussed. Meanwhile, American tech companies have not yet paid the new tax and are awaiting guidance.

Aarti Shahani, NPR News.


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