France and the United States on Tuesday said they would seek to ward off a trade war after Washington threatened tariffs on French products ranging from sparkling wine to handbags and Paris warned of retaliation backed by the entire EU.

The French parliament infuriated the administration of President Donald Trump in July by adopting a law taxing digital firms like Google, Apple, Facebook and Amazon for revenues earned inside the country.

Talks to resolve the issue have so far failed, and on Monday Washington threatened to impose tariffs of up to 100 percent on $2.4 billion in French goods including champagne, cosmetics, yoghurt and Roquefort cheese.

"We were in contact yesterday with the European Union to ensure that if there are new American tariffs there will be a European response, a strong response," French Finance Minister Bruno Le Maire told Radio Classique.

The EU backed up his comments, with commission spokesman Daniel Rosario saying that "as in all other trade-related matters the EU will act and react as one and it will remain united."

The full list of French products subject to potential duties includes cosmetics, porcelain, soap, handbags, kitchen equipment, butter and several kinds of cheeses, including Roquefort, Edam and Gruyere.

But despite Trump's repeated threats to retaliate against French wines, only sparkling wine like Champagne made the tariff list.

The measures could be imposed after January 14, the last date set by the US authorities for comments on the action.

- 'Emmanuel just had an idea' -

But speaking at talks with Macron at the NATO summit in Britain, Trump said that the US had a "lot of trade" with France and that the dispute was "minor".

"I think we'll probably be able to work it out, but we have a big trade relationship and I'm sure that within a short period of time things will be looking very rosy," he said.

He had earlier condemned the French tax while insisting he was "not in love with those companies, Facebook, Google, all of them".

"They're our companies, they're American companies, I want to tax them, those companies. They're not going to be taxed by France... It was totally out of the blue, Emmanuel just had an idea, to tax those companies," he said.

The US president was already on the warpath against Macron over his recent comments that NATO was experiencing "brain death," which Trump said were "very, very nasty".

The Organization for Economic Cooperation and Development (OECD) put forward initial proposals in October for a "unified approach" in the hope of reaching an agreement next year.

Cedric O, France's secretary of state for the digital economy, told AFP in Washington that France believed there was still time to stave off the threat of tariffs.

"The first and foremost objective that we have is to strike a deal at the OECD," he said, insisting that the current row was "not the end of the story".

He said France needed to explain to the US that it was not a discriminatory tax but one that applied to "every company that has a digital business model, be it an American, Chinese or European company."

- 'Clear signal' -

France, backed by Britain and others, argues that multinational digital giants must pay taxes on revenues accrued in a country even if their physical headquarters is elsewhere. But Washington says that US companies have been singled out.

The decision "sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies," US Trade Representative Robert Lighthizer said in a statement Monday.

The French tax imposes a three percent levy on the revenues earned by technology firms in France, which often come from online advertising and other digital services.

It targets revenue instead of profits, which are often reported by tech giants in low-tax jurisdictions like Ireland or Luxembourg in a practice that has enraged governments.

This could affect the EU's ability to respond in a united fashion, with smaller states where the companies have their headquarters less enthusiastic about the tax.

The dispute risks opening another front for the United States in a succession of trade disputes.

The US and China are already embroiled in a trade war, and Trump said this week that tariffs would be reinstated on Argentina and Brazil, accusing them of manipulating their currencies and hurting US farmers.

US trade war targets: the list lengthens
Paris (AFP) Dec 3, 2019 - Donald Trump's high-profile trade war with China may be the biggest threat to the world economy among current trade disputes waged or threatened by the US President, but the list of Washington's targets is lengthening.

- Chinese chronicle -

The bedrock of Trump's trade policy disputes is the relation with China.

The world's two biggest economies have spent two years levying trade tariffs on each other along with threats of more tariffs.

Washington has already hit more than half of the roughly $500 billion in annual US imports from China with increased duties, while Beijing has done the same to around $110 billion worth of US goods.

Trump wants the Chinese to halt massive state industrial subsidies, to curtail its policy of forcing foreign companies to transfer technology to Chinese partners, and to stop alleged theft of intellectual property.

The next key date is December 15, when new US tariffs could take effect.

Meanwhile, dangled prospects of a modest trade deal that could mark a truce and which have kept financial markets on tenterhooks appeared to be in off-again mode on Tuesday.

Trump told a press conference in London: "I have no deadline. In some ways I like the idea of waiting until after the election for the China deal," a reference to his bid for a second term in November 2020.

- France and European Union -

The EU has long been a US ally, but Trump regularly threatens to slap tariffs on European goods.

German automakers have been spared so far, but French products are now on the front line.

That is because France passed a law taxing digital giants like Google, Apple, Facebook and Amazon on revenues earned inside the country.

On Monday, US Trade Representative Robert Lighthizer said Washington might impose tariffs of up to 100 percent on $2.4 billion in French goods like sparkling wine, yoghurt and Roquefort cheese in retaliation.

French Finance Minister Bruno Le Maire has vowed that Paris will only give up the digital tax if a global one being mulled by the Organisation for Economic Co-operation and Development replaces it.

He said Tuesday that "if there are new American tariffs there will be a European response, a strong response".

An EU spokesman said the bloc would respond "as one" to the US threat.

A separate front involves an ongoing spat over subsidies for Boeing and European planemaker Airbus.

On Monday, a World Trade Organization panel found that the EU had failed to remove illegal subsidies to Airbus, reinforcing an earlier WTO decision that allowed the US to retaliate with tariffs on $7.5 billion in EU exports.

- Argentina and Brazil -

Trump on Monday said steel and aluminium tariffs would be reinstated on Argentina and Brazil, accusing them of manipulating their currencies and hurting US farmers.

"Brazil and Argentina have been presiding over a massive devaluation of their currencies," which was hurting American farmers, Trump said on Twitter.

Trump last year announced global tariffs of 25 percent on steel and 10 percent on aluminum but later approved exemptions for some countries, including Argentina and Brazil -- after they agreed to quotas.

Brazil is the second-largest supplier of steel to the US market behind Canada.

Brazil and Argentina have benefitted from the US trade war with China, as they have stepped in to replace American exports of soybeans and other agricultural goods to the Asian giant.

- Canada and Mexico -

Following months of tense talks, the United States-Mexico-Canada Agreement (USMCA) took a major step towards replacing the NAFTA trade pact that had ensured free trade in North America for the past quarter century when Mexico ratified the deal in June.

Both the US and Canada have yet to follow suit, and Democratic lawmakers in the US are seeking a number of changes.

Meanwhile, Trump has cast doubt on the agreement by threatening Mexico with tariffs to force the country to stem the flow of migrants to the US.

- India -

India is another target of Trump's wrath, with the US halting in June trade advantages that Indian goods had enjoyed.

Washington removed India from a list of countries that received duty-free access for billions of dollars worth of imports after Trump said the US did not receive comparable treatment in return.

The move came on the back of higher US tariffs on Indian steel and aluminium.

India replied with duties on 28 goods from the United States, including almonds and apples.

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