France is set to implement a new tax for online technology giants this year, breaking an agreement with the United States over the long-running tax fight that could initiate a round of punitive US tariffs on French goods, AFP reported.

“The companies subject to this tax have been notified,” the French finance ministry said on Thursday, referring to tech firms including Google, Amazon, Facebook and Apple, collectively known as the “GAFA” in France.

US President Donald Trump has said that the tax is unfairly targetting American tech companies, and last year threatened import duties of 25% on $1.3 billion worth of French products, including cosmetics and handbags by renowned brands.

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Notably, France and other European countries including Britain and Spain are taking action after intense public pressure to make US multinational firms pay a larger share of their revenues in taxes in the countries where they operate.

Under EU law, companies in the United States can declare profits from across the bloc in a single member state — and most pick low-tax jurisdictions such as Ireland or the Netherlands.

In 2019, President Emmanuel Macron’s government enacted a 3% levy on the profits from providing online sales for third-party retailers — such as Amazon’s Marketplace — as well as on digital advertising and the sale of private data.

That year the taxes brought in around 400 million euros ($475 million), an amount expected to grow steadily in the coming years.

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But Paris struck a deal with Trump’s administration last year to suspend collection of the levy while seeking a global digital tax deal under the auspices of the Organisation for Economic Cooperation and Development (OECD).

The surge in sales for online retailers during the coronavirus lockdowns across Europe this year raised pressure on governments to take a tougher fiscal stance, not least to help pay for massive aid programmes for businesses forced to close.