Europe scrambles to fight off threat of U.S. tariffs on France

The European Union’s trade chief said the race is on to avert an escalation in transatlantic commercial tensions as a result of U.S. objections to a French digital-services tax.

European Trade Commissioner Phil Hogan said coming days could determine whether the EU succeeds in helping broker an international agreement on the taxation of digital businesses through the Organization for Economic Cooperation and Development.

“Next week is a very important week to try and see, could we come to a positive outcome on this,” Hogan said in a Bloomberg Television interview on Thursday in Washington. “I’m not going to prejudge the outcome.”

President Donald Trump is threatening to hit $2.4 billion of French goods with tariffs in retaliation for the digital-services tax in France. The U.S. alleged on Dec. 2—the day after Hogan became EU trade chief—that France’s levy discriminates against American technology companies such as Google, Apple Inc. and Amazon.com Inc.

If realized, this would mark the first time the Trump administration had deployed against Europe a policy tool—Section 301 of a 1974 American law—reserved so far for the trade war with China. The prospect has alarmed the EU, which is already scrambling to expand its policy arsenal in response to a separate U.S. threat to the rules-based international system.

Hogan signaled that talks on the matter between French Finance Minister Bruno Le Maire and U.S. Treasury Secretary Steven Mnuchin are key.

Le Maire and Mnuchin “are in daily communication to see how we can move this process along toward some compromise,” Hogan said.