US President Donald Trump has accused French President Emmanuel Macron of “foolishness” over a digital services tax, and hinted that he would tax French wine in retaliation.
This is in response to French plans to tax multinational firms like Google.
French authorities argue that the firms pay little or no corporate tax in countries where they are not based.
The Trump administration has said the tax unfairly targets US tech giants.
“France just put a digital tax on our great American technology companies. If anybody taxes them, it should be their home Country, the US,” Mr Trump wrote on Twitter.
“We will announce a substantial reciprocal action on Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”
Asked about the issue in the Oval Office later, Mr Trump, who is teetotal, said: “I’ve always liked American wines better than French wines. Even though I don’t drink wine. I just like the way they look.”
The US is the world’s largest consumer of wine and the largest import market, with France consistently among the top origin countries for imported wine.
French Finance Minister Bruno Le Maire responded on Friday by saying that France would stick to its digital tax plans. “Universal taxation of digital operations is a challenge that affects us all,” he said.
The French government argues that multinational firms such as Apple, which are headquartered outside the country, pay little or no tax on their sales in France. The digital sales tax was approved by the French senate on Thursday, a week after it was passed by the lower house, the National Assembly.
Any digital company with revenue of more than €750m ($850m; £670m) – of which at least €25m is generated in France – will now be subject to the tax, which will be retroactively applied from early 2019 and is expected to raise about €400m in revenue this year.
Earlier on Friday, President Trump warned US tech giant Apple that it would not be given any tariff relief on parts made in China. “Make them in the USA, no Tariffs!” he wrote.
Prior to Mr Trump’s tweet on Friday, US Trade Representative Robert Lighthizer had announced an investigation into the French tax, arguing that France was “unfairly targeting the tax at certain US-based technology companies”.