President Donald Trump is stepping up to defend Apple. Well, kind of.
The president ordered an investigation into France’s planned tax on big tech companies like Apple, Alphabet, Facebook and Amazon. The Office of the United States Trade Representative said the tax “unfairly targets” American companies.
Update 1: France passed the tax Thursday, according to Agence France-Presse: “The legislation — dubbed the GAFA tax in an acronym for Google, Apple, Facebook and Amazon — was passed by a simple show of hands in the Senate upper house after it was agreed by the National Assembly lower chamber earlier this month.”
“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” U.S. Trade Representative Robert Lighthizer said, announcing the investigation.
Lighthizer can take up to a year to investigate the issue. The investigation could potentially lead to new tariffs or trade restrictions.
According to Lighthizer, Trump “directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.”
Unethical tax avoidance?
France’s proposal could place a 3% tax on tech companies with annual revenue of more than $842 million. It reflects an ongoing concern, particularly in certain parts of the European Union, that some tech companies engage in unethical tax avoidance.
“We are becoming an increasingly digital world and it will be a huge problem if we do not find a way to raise [digital] taxes,” European Competition Commissioner Margrethe Vestager said in April. “The best thing is a global solution. But if we want to obtain results in a reasonable period of time, Europe must take the lead.”
Update 2: Also on Thursday, Britain proposed a new “digital services tax” on international tech giants, “which it plans to impose until leading economies reach an agreement on the contentious issue,” according to France 24.
Tariffs could still be bad news
While tech companies are presumably happy that the United States is hitting back at attempts to tax them more, this still sets up potential conflicts. The threat of tariffs on Chinese goods severely hurt companies like Apple.
The fact that Apple does not manufacture iPhones in France somewhat diminishes the impact of the proposed new tax. Nonetheless, a technology industry lobby group, ITI, urged the U.S. not to resort to tariffs. ITI represents a number of tech giants, including Apple.
“We support the U.S. government’s efforts to investigate these complex trade issues but urge it to pursue the 301 investigation in a spirit of international cooperation and without using tariffs as a remedy,” said Jennifer McCloskey, ITI’s VP of policy.
Note: Cult of Mac published the original version of this post at 3:30 a.m. on July 11, 2019.