What's going on?

America struck back against France’s controversial new tech tax late Monday � and big US firms will be celebrating.

What does this mean?

While it failed to gain European Union-wide approval, France went ahead and introduced a 3% �digital services tax� anyway in August. La R�publique is keen to ensure tech giants pay a fair level of tax relative to the amount of business they actually do in the country. The idea is that they pay tax on revenues generated in France � relatively simple to calculate � rather than on profits that can be shifted to tax havens.


While France insists the new tax tackles firms from all countries � including China � the US views it as an unfair attack on American tech companies. And it�s threatening to bite back with 100% tariffs starting early next year on $2.4 billion worth of popular French products, from sparkling wine and cheese to makeup and handbags � effectively doubling their prices.

Why should I care?

For markets: A new front opens up.

France has vowed to retaliate against any new tariffs, and it might find support among its neighbors: the US has threatened other European countries planning digital service taxes with similar tariffs. But if this descends into yet more trade war, then European manufacturers � already struggling with existing battles � will hardly be cracking open the champagne. Less business with the US would make things decidedly less bubbly for Europe’s economy and its stock markets.

The bigger picture: What goes around comes around.

LVMH, the French producer of Mo�t bubbles and Louis Vuitton handbags, saw its stock price fall on Tuesday. And the luxury goods giant might soon have something else to worry about: if France is arguing that tax should be paid where revenue is generated � and is targeting Chinese tech firms accordingly � then what�s to stop China asking the same of LVMH, given the group makes nearly a third of its sales there?