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American importers of French cheese, bubbly and porcelain are raising their voices in Washington, hoping against hope they can outweigh Silicon Valley giants in a battle over tariffs on luxury items from France.
President Donald Trump last month threatened to punish Paris for a new tax on tech giants like Netflix and Amazon, unveiling sky-high retaliatory duties on about $2.4 billion in French wines, makeup and leather handbags.
US trade officials on Tuesday are due to hold a public hearing to allow individuals and companies to comment on the punitive measure.
But already complaints have poured in from mom-and-pop outlets across the United States warning of layoffs, lost business and damage to innocent bystanders.
The new US import duties are designed to pinch some of France’s most emblematic and politically sensitive industries — adding to the pain already hitting the country from $7.5 billion in tariffs Trump slapped on European Union exports in October in a clash over subsidies to aircraft maker Airbus.
Jobs at stake
The latest battle pits the interests of globe-spanning American tech behemoths against local retailers and middlemen who eke out small margins supplying bars, restaurants, shops and department stores.
“The tariff will effectively shut down the access Americans have to European wines (and many other artisanal products) and as a result, tens of thousands, if not hundreds of thousands of people will lose their jobs,” California wine merchants Kermit Lynch and F. Dixon Brooke said last month in a letter to US Trade Representative Robert Lighthizer.
Washington has urged other countries not to follow the example France set in July when it unilaterally announced a tax on the gross revenues of large tech companies. The actual profits of such companies are frequently not disclosed on a country-by-country basis, frustrating local governments.
The US instead urged countries to wait for a negotiated multilateral solution.
But Canada in December became the latest country to say it was considering such a measure.
Pounding the table
Silicon Valley’s powerful lobbyists have attacked the French tax, pouncing on public statements from finance minister Bruno Le Maire in particular to argue that US industry is unfairly being singled out.
The Computer & Communications Industry Association (CCIA), whose members include Facebook, Amazon and Google-parent Alphabet, said in August it “does not take a position on whether the use of tariffs is appropriate” in the case of France’s digital services tax.
But “it appears that there are limited options left to address this dispute in a timely manner,” the organization said.
The French tax imposes a three percent levy on the revenues — often from online advertising and other services — earned by technology firms within the country’s borders.
In August, France agreed to refund any taxes collected in excess of the yet-to-be-decided international formula.
But as proposals for digital services taxation gain popularity around the world, Washington has been left to pound the table ever harder.
US treasury secretary Steven Mnuchin early last month warned of a “proliferation of unilateral measures” and urged “all countries to suspend digital services tax initiatives,” allowing the Organization for Economic Cooperation and Development (OECD) to complete a study on an international tax on the digital giants.
An imbalance of power
Public outcry has so far failed to persuade the White House to reverse course once Trump — whose family operates a winery in Virginia — has announced tariffs.
The imbalance of power in the latest episode was clear: CCIA, for example, which does not include Microsoft or Apple, claims its members employ a million workers and generate $540 billion in revenue a year.
A group of US importers and distillers, however, said in August that retaliatory US liquor and wine tariffs in the Airbus dispute threaten between 11,000 and 80,000 US jobs.
Others commenting on the matter told the US trade representative’s office that the new tariffs would deprive them of one of life’s fleeting joys.
“Please do NOT impose tariffs on European wines,” a man named Gerald Ansel wrote in a comment he submitted on New Year’s Eve.
“I can no longer work due to a disability and my income has drastically decreased. Please don’t take away one of the few things that still provide me with a little pleasure.”
(PA)
