U.S. opens door to new tariffs over France tech tax

July 11 (UPI) -- The Trump administration has promised an investigation after French lawmakers approved a bill Thursday to impose a tax on large technology firms that provide services in France.

The French senate passed the bill, which mandates a tax worth 3 percent of companies' total annual revenue. The tax applies only to large tech firms, a stipulation that alarms U.S. Trade Representative Robert Lighthizer.

"The United States is very concerned that the digital services tax ... unfairly targets American companies," he said. "The structure of the proposed new tax as well as statements by officials suggest that France is unfairly targeting the tax at certain U.S.-based technology companies."

In response, U.S. officials called for a Section 301 investigation into unfair trade practices, fearing the proposed tax would unfairly punish large American firms like Google and Amazon. The inquiry could lead to retaliatory tariffs.

France officials rejected the U.S. complaint.

"Between allies, I believe we can and must resolve our differences in another way than through threats," Economy Minister Bruno le Maire told the French Senate. "It is the first time in the history of the relationship between the United States and France that the U.S. administration has decided to open [a Section 301 investigation]."

The proposed tax would take effect in January, but requires approval from French President Emmanuel Macron, who has not yet said whether he'll sign it.

Lighthizer's office will hold hearings to hear public comment before recommending any further action.

The U.S. investigation is similar to its inquiry into China before the administration imposed tariffs on $250 billion worth of Chinese exports.

U.S. officials said they prefer to settle an economic dispute with a multilateral tax agreement, through the G20 economic forum.