A new tax on digital services has led to protests from the likes of Amazon, Facebook and Google
you, don’t tax me, tax that fellow behind the tree.” Historically, this rhyme has poked fun at the tax-shy American public. Today it reflects complaints against the French government, which on July 25th introduced a tax on digital services. American companies such as Amazon, Facebook and Google are protesting that they are being treated like the fellow behind the tree. President Donald Trump is itching to hit back. Unilateralism is a language he can understand.
Not surprisingly, the Trump administration has taken umbrage. It has begun an investigation into the French tax under Section 301 of the Trade Act of 1974 . On August 19th eight officials heard the companies’ formal complaints. “We cannot absorb this expense,” claimed Amazon’s representative. The administration seems almost certain to end up finding fault with the French. America could then complain to the World Trade Organisation. But Mr Trump is more likely to fight unilateralism with unilateralism, by raising taxes on French individuals or firms, or by imposing tariffs. The president appears particularly keen to raise duties on French wine.
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