What Happened: France and the United States have reached a compromise on Paris' digital tax, Reuters reported Aug. 26. Under the agreement, France would repeal its tax and reimburse technology companies as soon as member states of the Organization for Economic Development agree on establishing an international levy, according to French President Emmanuel Macron.
Why It Matters: The agreement between U.S. and French negotiators will defuse some trade tensions between the countries after U.S. President Donald Trump threatened to impose import tariffs on French products to retaliate against the digital tax.
Background: U.S. officials have accused France of unfairly targeting U.S. technology companies with its digital tax. In response to Paris' decision to move forward with the levy, U.S. Trade Representative Robert Lighthizer launched an investigation under Section 301 of the U.S. Trade Act of 1974 that Trump could use to retaliate against the tax.
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