The Trump administration is threatening to slap import taxes on $2.4bn worth of French goods in retaliation for the country’s new digital services tax.
The US says the tax penalises firms like Google, Amazon and Facebook, and is proposing to hit back with tariffs of up to 100% on products including cheese, champagne and handbags.
The digital tax is designed to prevent tech firms from dodging taxes.
French minister Bruno Le Maire called the US threat “unacceptable”.
“In case of new American sanctions, the European Union would be ready to riposte,” the finance minister told French radio on Tuesday.
On Monday, US Trade Representative (USTR) Robert Lighthizer said the potential tariffs on French goods were intended to deter other countries from taking similar steps.
The items that could face tariffs includes champagne and sparkling wine, Roquefort and other cheeses, make-up, handbags, and homeware such as porcelain and bone china..
Mr Lighthizer said the tariff proposal “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies”.
Before the tariffs are confirmed, there will now be what the US called a period for public comment, including a hearing in Washington in January.
The French tax, condemned by US tech firms, is designed to prevent them avoiding taxes by putting headquarters in low-tax European countries. It imposes a 3% tax on any digital company with revenue of more than €750m ($850m; £670m) – of which at least €25m is generated in France.
But the US says the law is inconsistent with international tax norms and “unusually burdensome” for US tech firms. Mr Lighthizer said the US was exploring opening investigations into similar laws in Austria, Italy and Turkey. The UK has also taken steps towards a tech tax. Read more