On June 15, 2026, as Emmanuel Macron prepared to host Donald Trump ahead of the G7 summit in Évian-les-Bains, the U.S. president threatened a 100% tariff on all French wine and champagne unless France scraps its Digital Services Tax (DST). "All Macron has to do is get rid of the sales tax, and he wouldn't have that kind of pressure," Trump said, per Euronews. The threat lands as French deputies have voted to double the levy from 3% toward 6% — reopening a transatlantic fight that a 2021 multilateral truce was meant to retire.
The case for the DST, stated fairly
The strongest argument for France's tax is straightforward and serious. Large platforms earn substantial revenue from French users and advertisers while booking profits in low-tax jurisdictions, leaving little to tax under traditional rules that key on physical presence. A levy on in-country digital revenue is a rough proxy for value that France argues is genuinely generated within its borders. Supporters note the DST was always framed as a stopgap pending a global deal, and that absent enforcement, the largest firms would continue to under-contribute relative to the economic footprint they enjoy. That is a real gap, and dismissing it as mere protectionism would be a strawman.
Why the instrument is the problem
The difficulty is that the DST is a poorly designed answer to a legitimate question. Because it taxes gross revenue rather than profit, its effective burden is far heavier than its headline rate suggests. As the Tax Foundation notes, a company earning a 10% margin that faces a 6% revenue tax is effectively paying a 60% tax on profit. Revenue taxes are also notoriously regressive in their incidence: the cost "mostly falls on consumers" and on the French advertisers and small businesses that buy digital services, not on the platforms the tax is named for.
The fiscal payoff is modest. France's DST raised roughly €756 million in 2024 — less than 0.06% of total government revenue, by the Tax Foundation's accounting. The pending hike, passed by the National Assembly in late October 2025 to take effect in 2026, would lift the rate to 6% and raise the global revenue threshold from €750 million to €2 billion. Prime Minister Sébastien Lecornu's minority government has signaled it will try to strike the increase down, precisely because the trade exposure dwarfs the revenue at stake.
A truce both sides are walking away from
This is not a new quarrel. In December 2019, the U.S. Trade Representative concluded a Section 301 investigation finding that the French DST "discriminates against U.S. digital companies" — naming Google, Apple, Facebook, and Amazon — and was inconsistent with prevailing tax principles because it applies to revenue, reaches extraterritorially, and targets specific firms. USTR proposed additional duties of up to 100% on roughly $2.4 billion of French goods, including wine, per its press release. Those tariffs were suspended, and on November 18, 2021 the action was formally terminated alongside parallel cases against Austria, Italy, Spain, and the UK, as USTR's Section 301 page records.
The reason for that 2021 stand-down matters: countries agreed, through the OECD/G20 framework, to withdraw unilateral DSTs as a two-pillar global tax deal came online, with the U.S. holding its tariffs in reserve. The 2026 escalation — France raising its DST, Washington reaching again for tariffs — is what happens when both parties abandon the compromise instead of finishing it. The G7 in Évian is, conspicuously, the exact forum built to resolve this.
Tariffs on wine are not proportionate regulation
A 100% duty on champagne is a blunt response to a tax dispute. The United States is France's largest wine and spirits market, accounting for about 21% of those exports, and French shipments to the U.S. already fell roughly 21% last year under an existing 15% tariff, according to figures cited by Euronews. Doubling prices at the border would punish growers in Champagne and Bordeaux who have no stake in digital-tax policy — collateral damage that violates the same proportionality principle France's critics invoke against the DST. Retaliating against an unrelated sector to win a tech-policy fight is escalation, not enforcement.
The honest read is that both unilateral moves are bad policy. A revenue tax that lands on consumers and raises a rounding error of national revenue is not worth the trade war it invites; a tariff that could halve a flagship export to settle a 0.06%-of-revenue dispute is wildly out of scale with the grievance.
The off-ramp already exists
The pro-innovation, evidence-based path is not zero taxation of large platforms — it is taxing them coherently and multilaterally. The OECD's two-pillar framework, including a 15% global minimum and reallocation of taxing rights to market jurisdictions, was designed precisely to make standalone DSTs unnecessary and to remove the pretext for retaliatory tariffs. France would lose little revenue by trading its DST for a credible multilateral allocation; the U.S. would protect its exporters and its firms from a discriminatory, cascading levy. Évian is the room where that bargain can be struck. Choosing wine tariffs and a 6% DST instead would leave consumers, growers, and the open digital economy worse off — to prove a point neither capital actually needs to make.