Digital Retaliation The creative crafting of a tax specifically designed to punish foreign-based companies such as France’s new digital tax is a potential slippery slope in international economic warfare. It entails adding domestic tax regimes to the traditional tools of tariffs, subsidies and nontariff barriers. One can easily imagine ways in which this policy approach could escalate. For example: • Imposing a tax on cheese that is aged more than 10 months would hit high quality European products such as Parmigiano Reggiano. The EU exports $1 billion a year worth of cheeses to the U.S. alone. • Taxing beer and wine made in countries where tap water fails to meet U.S. standards would impact $7 billion worth of European ex...