(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. If the U.S. follows through on a threat to hit
France with
tariffs on $2.4 billion of its exports, the
European Union will react collectively and in a proportionate manner that would consider all options available, according to an official familiar with the bloc’s deliberations.The EU’s chief trade negotiator Phil Hogan met with French Finance Minster Bruno Le Maire on Wednesday to discuss how to react to the
American threat. Hogan said in the meeting that this was a European matter and that the bloc would react as one, said the official, who asked not to be identified because the discussion was private.The office of the U.S. Trade Representative announced this week that it was considering the tariffs in response to a French digital services tax that it says unfairly discriminates against U.S. companies. The levy would hit tech companies including
Google,
Apple Inc.,
Facebook Inc. and Amazon.com Inc.“It’s clear that if the U.S. would impose
sanctions on France, the EU would react in a united way to protect France,” Le Maire told reporters in
Brussels after the meeting. “We don’t want to enter into this rationale of sanction and retaliation, that’s not what we want, but we’re forced to protect ourselves if the U.S. decides to follow through.”Hogan is working closely with the French to coordinate their next steps, according to the official.French President
Emmanuel Macron says the tax on tech companies is necessary because the structure of the global
economy has shifted to one based on data, rendering current systems archaic. His government is trying to use the national tax as a bargaining chip in its push for nations to agree to a global accord, which so far has remained elusive.France’s tax, retroactive to January, affects companies with at least 750 million euros ($831 million) in global revenue and digital sales of 25 million euros in France. While most of the roughly 30 businesses affected are American, the list also includes Chinese, German,
British and French companies.The French government says it’s urgent to overhaul tax rules because the average tax rate for digital companies in the European Union is only 9.5%, compared with 23.2% for other companies.“The EU will act and react as one and it will remain united,”
European Commission Spokesman Daniel Rosario said this week. “We are coordinating closely with the French authorities with the next steps.”\--With assistance from Rudy Ruitenberg.To contact the reporters on this story: Richard Bravo in Brussels at rbravo5@bloomberg.net;Jonathan Stearns in Brussels at jstearns2@bloomberg.netTo contact the editors responsible for this story: Ben Sills at bsills@bloomberg.net, Flavia Krause-JacksonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.