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In response to French Digital Services Tax (DST) Bill that would impose a 3% tax on total annual revenues generated by some companies from providing certain digital services to, or aimed at, French users, the US Trade Representative (USTR) set up a Section 301 investigation that will assess if France’s levy poses an unfair trade practice.

The investigation would question if the bill would hurt US technology companies.

The USTR notice also quoted the US Trade Representative Robert Lighthizer saying   that the US is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies. He further mentioned that the President Donald Trump has directed that we investigate the effects of this legislation and determine whether it is discriminatory or unreasonable and burdens or restricts United States commerce.

FX implications

Previously, such investigations have covered Chinese trade practices and European Union subsidies on large commercial aircraft that largely triggered the market risk-off momentum.