Trump threatens 100% tariff on French wine over digital tax at G-7

President Donald Trump threatened a 100% tariff on French wines hours before the G-7 summit Monday, demanding Paris scrap its 3% digital tax on US tech giants or lose access to a $2 billion export market.

"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," Trump told the New York Post. "All [Macron] has to do is get rid of the sales tax, and he wouldn't have that kind of pressure."

The ultimatum revives a 100% tariff level first proposed by the US Trade Representative in 2019, when the digital levy was enacted. French wine and spirits already face a 15% tariff. Alcohol is among the European Union's top exports to the US, worth about €9 billion ($10.5 billion) in 2024, according to Eurostat data. The US accounts for roughly one-fifth of French wine industry sales globally.

The threat sets up a confrontation at the three-day G-7 summit in Évian-les-Bains, where European leaders arrived hoping to manage tensions with Trump after conflicts over the Iran war and Greenland. A senior White House official said the administration is "committed to using the many legal authorities at our disposal to defend American workers and businesses."

France's digital services tax, known as the GAFAM levy, has been in force since 2019. It applies a 3% charge on revenue earned in France by digital companies with more than €25 million in local revenue and €750 million in global revenue. The tax disproportionately affects US technology firms including Alphabet Inc., Apple Inc., Amazon.com Inc., and Meta Platforms Inc., generating roughly $700 million for the French treasury last year.

The dispute escalated in October when France's National Assembly voted 296-58 to double the tax to 6% and narrow its threshold to target the largest global players. Ministers later vetoed the move. Lawmakers had initially floated a 15% increase before scaling it back under industry pressure. Then-Economy Minister Roland Lescure warned at the time that a "disproportionate" tax would invite "disproportionate" American reprisals.

Macron pushes back as G-7 begins

French President Emmanuel Macron rejected Trump's demand upon arriving in Évian-les-Bains. "It doesn't work like that," Macron said. "The digital tax is part of our legal system. It's not up to the United States to decide."

The exchange shattered claims by Macron's office last week that the dispute was "no longer up for debate" among G-7 countries — an account a US official dismissed as "not accurate."

Trump's threat isolates France from several allies that have bowed to Washington's pressure. Canada shelved its digital tax in 2025 after the US broke off trade talks. Italy is reportedly weighing a repeal of its own levy. Britain has retained its digital services tax under its current trade arrangements with the US.

The tariff warning is the latest flashpoint in a deteriorating transatlantic relationship. German Chancellor Friedrich Merz criticized the US over its conduct of the Iran war in April, saying "an entire nation is being humiliated." Trump responded by announcing the withdrawal of 5,000 US troops from Germany, a move the Pentagon said would be completed by year-end.

European leaders at the G-7 are balancing a more assertive posture toward Trump with the need to preserve intelligence sharing and security cooperation. The US and Iran agreed to an interim peace deal to reopen the Strait of Hormuz ahead of the summit, though the text has not been released. France, Germany, Italy and the UK said they are committed to an international mine-clearing mission but insisted it remain "strictly defensive and independent."

The last time Trump threatened 100% tariffs on French goods in 2019, the two sides reached an eleventh-hour truce at the G-7 in Biarritz. This year, with the digital tax still in place and France's legislature having voted to double it, the room for compromise appears narrower.

This article is for informational purposes only and does not constitute investment advice.