LONDON (REUTERS, AFP) - US President Donald Trump said his French counterpart Emmanuel Macron gave "one of the greatest non-answers I have ever heard" at a joint news conference on Tuesday (Dec 3).

In response to a question posed to Trump by a US journalist who asked whether France should do more to take ISIS fighters captured in the Middle East, the US President said he would pass that question on to Macron, asking him in a light-hearted tone if he would like "some nice ISIS fighters".

The French President gave a long answer, in which he argued that foreign fighters from European countries were a small minority among troops with the Islamic State of Iraq and Syria (ISIS), and that it would be unhelpful to focus on them rather than on the broader problem.

He said the priority was to finish the war against the militant group.

"This is why he is a great politician because that was one of the greatest non-answers I have ever heard, and that's OK," Trump said.

Britain is hosting Nato leaders to mark the military alliance's 70th anniversary, but the timing is delicate as frictions abound among the allies.

Macron accused Turkey of working with ISIS proxies and said Ankara needed to clarify those ambiguities during meetings this week.

"The common enemy today is the terrorist groups. I'm sorry to say, we don't have the same definition of terrorism around the table," Macron told reporters, sitting alongside Trump in London ahead of the Nato summit.

"When I look at Turkey they are fighting against those who fought with us shoulder to shoulder against ISIS and sometimes they work with ISIS proxies," Macron said.

US-FRANCE TRADE SPAT

On US trade spat with France, Trump said, however, that it should be possible to rapidly resolve it.

The United States has threatened to impose duties of up to 100 per cent on imports of champagne, handbags and other French products worth US$2.4 billion (S$3.3 billion) after a US government investigation found that France's new digital services tax would harm US technology companies.

"We do a lot of trade with France and we have a minor dispute," Trump told reporters.

"I think we'll probably be able to work it out but we have a big trade relationship and I'm sure that within a short period of time things will be looking very rosy," Trump said.

Macron stressed, however, that he was "determined to defend the interests of our country and of Europe".

The spat marks a new low in testy relations between Trump and Macron, who have been at odds over the American's unilateralist approach to trade, climate change and Iran.

Earlier on Tuesday, Trump criticised European allies, singling out Macron for his "very nasty" comments portraying the Nato alliance as "experiencing brain death".

Macron's finance minister called the tariff threat unacceptable and said the EU was primed to respond if the United States imposed the new tariffs.

The European Commission, the EU executive, said the 28-nation EU would act as one and that the best place to settle disputes was at the World Trade Organisation (WTO).

The US has already imposed 25 per cent duties on French wine and cheese as part of its WTO-sanctioned response to illegal EU aircraft subsidies, a move exporters said would penalise US consumers while severely hurting French producers.

INTERNATIONAL SOLUTION

France's 3 per cent levy applies to revenue from digital services earned by companies with more than 25 million euros (S$38 million) of revenues from France and 750 million euros worldwide.

An investigation by the US Trade Representative's office found the French tax was "inconsistent with prevailing principles of international tax policy". It said the tax was "unusually burdensome" for US companies including Alphabet Inc's Google, Facebook, Apple and Amazon.com Inc.

France is not alone in targeting big digital companies; a growing number of other countries are preparing their own taxes.

Governments, including Washington, are frustrated that big digital companies can book earnings in low-tax countries such as Ireland regardless of where the end client is.

France says it will drop its digital tax as soon as an agreement is found at the Organisation for Economic Cooperation and Development to overhaul decades-old international tax rules.

FRENCH LUXURY STOCKS FALL

Shares in French luxury companies fell in response to the tariff threat against French champagne, handbags, cheeses and other products.

Hermes was around 2.8 per cent lower, while LVMH and Kering fell 1.7 per cent and 2.8 per cent respectively.

Champagne maker Vranken Pommery was down by 2.4 per cent.

French products will not face tariffs immediately as the US Trade Representative still intends to gather public comments and hold a public hearing in January.

Based on past experience of Section 301 tariffs, primarily applied to Chinese goods, France would face punitive tariffs in two or three months.

Any retaliatory action from France would have to be taken at an EU-wide level because the bloc is a customs union which applies duties at its border.