The tax discriminates against USA tech giants Apple, Amazon, Facebook and Google, the Trump administration says.
The trade office hasn't said when the additional tariffs would kick in.
The US trade representative (USTR) said on Monday night, after completing an investigation, it found the French digital services tax unfairly discriminated against American technology companies such as Google, Apple, Facebook and Amazon.
Any retaliatory action from France would have to be taken at an EU-wide level because the 28-nation bloc is a customs union, which applies duties at its border.
Earlier Monday, French Finance Minister Bruno Le Maire appeared to not have much confidence in the DST going over well with the Trump administration and predicted Washington was likely to respond with tariffs.
The U.S tariffs could double the price American consumers pay for French imports and would come on top of a 25% tax on French wine imposed last month over a separate dispute over subsidies to Airbus and Boeing.
France's three percent levy applies to revenue from digital services earned by companies with more than 25 million euros (27.86 million USA dollars) of revenues from France and 750 million euros (830 million US dollars) worldwide.
He later told a press conference: "We are not targeting any country".
The statement says France's digital tax is inconsistent with worldwide tax principles.
It has been claimed by many countries across the world that tech giants, such as Amazon (AMZN), Facebook (FB), Google (GOOG), Netflix (NFLX), Apple (AAPL) and Microsoft (MSFT), are paying a relatively small amount of tax to the countries it makes sales in.
France's finance minister is threatening a "strong European riposte" if the Trump administration follows through on a proposal to hit French cheese, Champagne, handbags and other products with tariffs - of up to 100%.
Hermes was around 1.9 percent lower, while LVMH and Kering fell by 1.3 percent and 1.2 percent respectively.