PARIS: French Economy Minister Bruno Le Maire warned the United States on Jan 6 that any retaliation to France's new digital services tax could "deeply and durably" damage relations.

Washington has threatened to impose duties of up to 100% on imports of champagne, handbags and other French products worth US$2.4bil after a US government investigation found the French tax would harm US technology companies.

"If the Americans decide to go ahead and impose sanctions against the digital tax... in this case we would retaliate," Le Maire told France Inter radio.

"If there were to be sanctions, and it is a possibility that we will take sanctions, we would immediately contact the WTO (World Trade Organization)", he added.

Le Maire said he had sent a letter on the issue to US trade negotiator Robert Lightizer and was also going to discuss it with US Treasury Secretary Steven Mnuchin by phone.

"If the US were to decide to impose trade sanctions against the EU over the French Digital Services Tax, it would deeply and durably affect the transatlantic relationship at a time when we need to stand united," the minister wrote in the letter seen by Reuters.

Le Maire also said in the letter that France was "in touch with the European Commission and other EU Member States on the subject” and that they were "contemplating the various options to defend our trade rights in a proportionate and determined manner, as we have in the past, ”.

Paris has long complained about US igital companies not paying enough tax on revenues earned in France.

In July, the government decided to apply a 3% levy on revenue from digital services earned in France by firms with more than €25mil in French revenue and €750mil worldwide.

The European Union has said it will stand by France in the dispute with the United States.

 - Reuters