Trade tensions between Washington and Paris are escalating once again as US President Donald Trump has revived a threat to impose a 100% tariff on French wine and champagne. The move is directly linked to France's digital services tax (DST), a 3% levy on revenues generated within the country by large technology companies such as Facebook, Amazon, Apple, and Google's parent company Alphabet.
According to a report in the New York Post on Monday, Trump told reporters that he had urged French President Emmanuel Macron "not to charge American companies." He added: "If they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France." The US president framed the issue as a simple choice for Macron: "All Macron has to do is get rid of the sales tax, and he wouldn't have that kind of pressure."
The threat comes just ahead of the G7 summit, which begins this week in Évian, on the shores of Lake Geneva. Macron is scheduled to host Trump for bilateral talks on Monday, making the tariff dispute a central point of contention. The summit itself is expected to cover a range of topics, including the Iran nuclear deal and AI regulation, as outlined in our preview of the G7 Summit in Évian.
Digital Services Tax: A Long-Standing Dispute
France introduced the DST in 2019, arguing that it ensures large tech companies pay tax where they generate revenue, countering aggressive tax-optimisation strategies that often shift profits to low-tax jurisdictions. Supporters of the levy maintain that it is a fair way to tax digital giants that benefit from European markets without contributing proportionally to public finances.
Washington has long opposed such taxes, viewing them as discriminatory against US-based firms. The Trump administration has previously threatened tariffs on French goods in response, and the current escalation is not the first time wine has been caught in the crossfire. In January, Trump threatened 200% tariffs on French wine after France signalled it would decline an invitation to join his proposed "Board of Peace."
The United States remains the largest export market for French wines and spirits, accounting for 21% of total exports last year, according to the French Federation of Wine and Spirits Exporters. Already, French and European wines face a 15% tariff, up from 10% previously. Exports of French wines and spirits to the US fell by 21% last year, a decline that could deepen significantly if the 100% tariff is imposed.
Canada provides a recent precedent: it dropped its own digital services tax last year after pressure from Trump, in an effort to preserve trade negotiations. France, however, has shown no sign of backing down, and the issue is likely to feature prominently in the Macron-Trump meeting.
The broader context includes ongoing EU-US trade tensions, with the expiry of the Airbus-Boeing truce threatening to reignite a separate dispute, as noted by a senior MEP in our coverage of the Airbus-Boeing truce expiry. For European policymakers, the digital tax dispute is a test of the bloc's ability to regulate global tech firms without provoking retaliatory tariffs.
As the G7 summit approaches, the wine tariff threat underscores the fragility of transatlantic trade relations. Whether Macron will yield or stand firm remains to be seen, but the outcome will have significant implications for French vintners and the broader European wine industry.
