Amazon, Google, Meta may face an upgrade of the French digital tax, and the United States may retaliate.

French lawmakers voted in favor of a bill to increase taxes on large tech companies, which may lead to retaliatory measures from U.S. President Trump. The president has long threatened to retaliate with trade tariffs. The French National Assembly (lower house) passed an amendment to the 2026 budget on Tuesday night, which could raise the digital service revenue tax rate on companies such as Amazon, Google's parent company Alphabet, and Meta, the parent company of Facebook, from the current 3% to 6%. This change is milder than another proposal to raise the rate to 15%, but it still means a significant increase in taxes on these companies that have exacerbated trade tensions across the Atlantic for years. Republican members of Congress in the U.S. have warned that raising the rate to 15% would be an "unjustified attack" on American tech companies, leaving "Congress and the Trump administration almost no choice but to take drastic retaliatory actions." This amendment is part of the budget bill that may be voted on next month or in December, and there is no guarantee that it will become law. The French government does not have a majority in parliament and has stated it will not use constitutional tools to bypass the vote, essentially ceding more control over fiscal legislation to lawmakers. The French government is cautious about this move and has stated it will continue to work with parliament, even though the proposal to raise the rate to 6% comes from lawmakers in President Emmanuel Macron's party. French tax revenue from the tech sector is increasing Finance Minister Bruno Le Maire said, "I note parliament's desire to strengthen taxation of digital giants. This issue must be handled carefully, especially in terms of raising tax rate thresholds, we must make progress at the European level and through international discussions." The French government is under pressure to find measures to control what has become the largest fiscal deficit in the Eurozone. On top of that, the opposition has threatened to pass a motion of no confidence in Prime Minister Sebastien Lecornu in the coming weeks if taxes on large corporations and the richest individuals are not significantly raised. On Monday, the government sought to appease lawmakers and increase revenue by raising the corporate tax rate more than initially planned. Another amendment introduced and passed by far-left opposition parties on Tuesday night would impose a universal tax on multinational companies based on the proportion of their operations in France. Le Maire said the measure would be "unworkable" as it may violate France's 125 bilateral tax treaties. France was among the first countries to implement a digital services tax in 2019 targeting the revenue of global tech companies. At the time, Trump called the tax unfair discrimination against American companies and threatened to impose tariffs on iconic French products including cheese, champagne, and handbags as retaliation. Eventually, both sides reached a truce through negotiations, under which France would withdraw its digital services tax once the global new tax rules for digital multinationals took effect. However, negotiations on these rules never reached a final agreement. Lawmakers proposing to raise the rate from 3% to 6% argue that the approximately 700 million euros (814 million US dollars) in revenue France earns annually from this tax is still "disproportionate" compared to the profits of large tech companies in France. The amendment also raises the global revenue threshold for companies subject to this tax from 7.5 billion euros to 20 billion euros.