US tariffs threat, France and EU ready to fight back

France and the European Union are ready to fight the latest US tariff threats on French products, French government ministers said on Tuesday.

On Monday, the US government said it could impose up to 100% punitive duties on $ 2.4 billion of imports from France, including champagne, handbags, cheese and other products, after concluding that the new digital services tax in France would hurt US tech companies.

French Finance Minister Bruno Le Maire described the US proposals as “unacceptable”. “In the event of new US sanctions, the European Union would be ready to be reopened,” Le Maire told Radio Classique.

French junior economy minister Agnes Pannier-Runacher told Sud Radio that France would be “savage” in its dealings with the US on the issue, and that France would not back down from its digital tax plans.

France’s 3% tax applies to revenue from digital services acquired by companies with more than 25m euros ($ 27.86m) in French revenues and 750m euros ($ 830m) worldwide.

But the Office of the US Trade Representative said Monday that its investigation revealed that the French tax was “contrary to the prevailing principles of international tax policy”.

He said he found the French tax proposal “extremely burdensome for affected US companies,” including Google Alphabet Inc (O: GOOGL), Facebook Inc (O: FB), Apple Inc (O: AAPL) and Amazon.com Inc. (O: AMZN).

The latest decision by the US government toppled major stakes in French luxury goods. Shares in LVMH (PA: LVMH), Kering (PA: PRTP) and Hermes (PA: HRMS) declined 1.4% to 1.5% in early trading.

“It is very dangerous to enter the luxury sector. The sector was first hit by protests in Hong Kong and now this will hit it even harder,” said Clairinvest fund manager Ion-Marc Valahu./Investing.com

 

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