Digital Tax Standoff
Trump Threatens 100% Tariffs on French Wine Over Digital Tax Dispute Before G7
Key Points
In his New York Post interview, Trump said he told Macron: “I asked him not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France,” adding that “All (Macron) has to do is get rid of the sales tax.”
France’s digital services tax (DST) is structured as a 3% levy on revenue from digital services for companies earning above specified thresholds—“more than €25 million” in France and “€750 million worldwide”—and is criticized because it taxes revenue rather than profit.
French lawmakers had moved to toughen the DST: an October vote sought to double it to 6% and narrow it to the largest firms, but the proposal was later vetoed amid concerns it could trigger U.S. retaliation.
Beyond tariffs, the U.S. policy response is still active: the New York Post reporting cited by one outlet said the U.S. Trade Representative (USTR) and the U.S. Treasury are “currently reviewing whether to resume an official investigation into the French DST,” after earlier actions considered in 2019.
Separately, Reuters-linked reporting said the EU is preparing stricter cloud requirements for public-sector contracts under its upcoming “Cloud and AI Development Act,” aiming at “digital sovereignty” and explicitly addressing worries that U.S. “Cloud Act” rules could allow American authorities access to data stored overseas.
President Donald Trump threatened to slap 100% tariffs on all French wine and champagne unless France scraps its 3% digital services tax on American tech firms. Trump revealed the ultimatum in a New York Post interview, saying he told French President Emmanuel Macron directly: "I asked him not to charge American companies, and if they do, I have no choice but to charge a 100% tariff on all champagnes and all wines coming out of France."
The warning landed just as Trump arrived at the G7 summit in Évian-les-Bains, France, on June 15. A 100% tariff would effectively double the price of French wine in the U.S. — turning a $30 bottle of Burgundy into a $60 purchase — threatening over $2 billion in annual French wine exports to America, according to Benzinga.
France's Digital Tax Has Targeted U.S. Tech Since 2019
France's digital services tax — sometimes called the "GAFAM tax" — has been a thorn in U.S.-France relations for years. Enacted in July 2019, it charges a 3% levy on digital revenue earned by companies with global revenues above €750 million and French revenues above €25 million, according to Kaohoon International. That threshold captures Google, Apple, Meta, Amazon, and Microsoft while exempting most European firms — which is exactly what Washington calls discriminatory.
The tax raises roughly $700 million per year for France, according to Eastern Herald. The U.S. argues it taxes revenue rather than profit, making it an unfair hit on American companies. Trump's current demand is blunt: "All he has to do is get rid of the sales tax," he said, referring to Macron.
Tariff Threats Escalated From 200% Down to 100%
This is not the first time Trump has aimed tariffs at French wine over the DST. In early 2026, he threatened 200% tariffs on French alcohol following broader geopolitical disputes, according to Benzinga. The current 100% figure represents a step down, though it would still be enough to gut French wine sales in America.
The original U.S. response dates back to 2019, when the U.S. Trade Representative launched a Section 301 investigation and threatened 100% tariffs before suspending them to allow OECD-led global tax talks. Those talks stalled. Now, the USTR and U.S. Treasury are "currently reviewing whether to resume an official investigation into the French DST," according to African Insider.
France Tried to Double the Tax — Then Pulled Back
France's own lawmakers nearly made things worse. In October 2025, the French National Assembly voted 296 to 58 to double the DST to 6% and narrow it to the very largest firms, according to Eastern Herald. The move was aimed at closing budget gaps. But government ministers vetoed the plan, fearing it would trigger exactly the kind of U.S. retaliation now unfolding.
France's official position is that the tax is a fair tool for "digital sovereignty" — ensuring multinationals pay their fair share where they earn money. French officials have said the DST will only be removed once a global OECD framework is in place, a timeline that remains unclear.
G7 Summit Puts Trade and Tech Sovereignty on a Collision Course
The tariff threat is now hanging over the G7 summit in Évian-les-Bains. Leaders are expected to tackle Ukraine, global economic imbalances, and artificial intelligence, according to News Inbox EU. But the wine dispute has already overshadowed those talks. French wine exports to the U.S. total more than $2 billion per year — about 20% of all global French wine sales.
Meanwhile, the EU is pushing in the opposite direction on tech policy. The European Commission published its Cloud and AI Development Act in early June, aiming to reduce reliance on U.S. cloud providers. The law would block U.S. firms from high-security public sector contracts and addresses concerns that U.S. law could let American authorities access data stored in Europe. Tech giants like Google, Meta, Amazon, Apple, and Microsoft stand to lose on both fronts — hit by France's DST and potentially locked out of EU government contracts.
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