Trump threatens 100 percent tariff on French wines ahead of G7 summit

Background: France's digital tax since 2019

The background to the conflict is the French digital services tax, which has been levied since 2019 on revenues earned in France by digital corporations. It amounts to three percent and affects companies with annual revenues of more than 25 million euros in France and 750 million euros worldwide. It therefore hits large US platforms in particular. France is one of several EU states that have introduced similar national digital taxes; Austria has such a model as well.

Macron reacted sharply on Monday in an interview with the French channel TF1 to the threat from Washington. "That's not how it works," said the French president, referring to the attempt to blackmail national tax policy with tariff measures. The tariff agreement between the EU and the US from 2025, which was originally to be finally approved by the European side this week, has come under additional pressure as a result of the move.

Reaction from Paris and risk for the EU-US tariff agreement

The fact that the US administration is threatening punitive tariffs against a single EU country is delicate: trade policy falls under the responsibility of the entire European Union. Tariffs or countermeasures against one member state therefore regularly trigger responses from the Union. Currently, a 15 percent tariff already applies to wines and spirits from the EU in the US; an additional surcharge of 100 percent would put exporters in a difficult position.

The US is the largest market for French wines and spirits. Last year, according to industry figures, around 21 percent of France's total exports in this segment went to the US market. In total, EU states exported alcoholic beverages worth around 9 billion euros to the United States in 2024, making the market one of the most important outside Europe.

Trade policy as EU competence: What a US tariff can trigger

Trump also proposed an unusual solution in the interview: "Macron would just have to abolish the value-added tax, then he would not be under this pressure," he said. In the sentence, the US president conflates two different levies: the national value-added tax and the special digital tax. From Paris's perspective, buckling on a national tax under US pressure is politically barely conceivable, especially since the levy was introduced in response to years of criticism of the inadequate taxation of international digital corporations.

Observers point out that Trump has repeatedly threatened punitive tariffs against European and other countries in the past, which were then often not implemented at all or only in a watered-down form. Nevertheless, the renewed threat shortly before the G7 meeting is providing additional talking points. Macron will receive Trump on Monday in Évian before the formal summit begins on Lake Geneva. German Chancellor Friedrich Merz is also expected there.

G7 summit in Évian: Trump and Merz expected by Macron

With regard to the G7 summit, the dispute over wine and the digital tax is likely to overshadow the meeting of heads of state and government. Should Washington make good on the threat, a trade-policy escalation between the US and the entire European Union would be expected. Should it – as in previous cases – remain a pressure tactic, Trump would at least have gained attention in the run-up to the summit. The EU Commission has not initially commented publicly on the matter.