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Dec 3, 2019
Business News: France says primed to retaliate with EU over U.S. tariff threat against Paris
PARIS
(Reuters) - France and the European Union are ready to retaliate if
U.S. President Donald Trump acts on a threat to impose duties of up to
100% on $2.4 billion in imports of champagne, handbags and other French
products, the French government said on Tuesday.
The threat of
punitive tariffs came after a U.S. government investigation found
France’s new digital services tax would harm U.S. technology companies,
and will intensify a festering trade dispute between Europe and the
United States.
Speaking in London on Tuesday morning ahead of a
NATO alliance summit, Trump said he would not allow France to take
advantage of American companies and that the European Union treated the
United States very unfairly on trade.
French Finance Minister
Bruno Le Maire branded the U.S. threat unacceptable and said the French
tax did not discriminate against American companies.
“In case of new American sanctions, the European Union would be ready to retaliate,” Le Maire told Radio Classique.
He later told a press conference: “We are not targeting any country.”
France’s
3% levy applies to revenue from digital services earned by companies
with more than 25 million euros ($27.86 million) of revenues from France
and 750 million euros ($830 million) worldwide.
An
investigation by the U.S. 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 U.S. companies including Alphabet Inc’s Google (GOOGL.O), Facebook Inc (FB.O), Apple Inc (AAPL.O) and Amazon.com Inc (AMZN.O).
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 (HRMS.PA) was around 1.9% lower, while LVMH (LVMH.PA) and Kering (PRTP.PA) fell 1.3% and 1.2% respectively.
“It’s
too risky to go into the luxury sector. The sector was hit first of all
by the Hong Kong protests, and now this will hit it even more,” said
Clairinvest fund manager Ion-Marc Valahu.
French
products will not face tariffs immediately as the U.S. 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 to three months.
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. The
European Commission did not immediately react to the U.S. trade threat.
The
tariff spat marks a new low in relations between French President
Emmanuel Macron and Trump, who will meet on the sidelines of the NATO
summit later on Tuesday.
From the two leaders’ early
bone-crunching handshake to the U.S. president appearing to flick
dandruff off the younger man’s shoulder, Macron and Trump have had a
testy relationship, at odds over the American’s unilateralist approach
to trade, climate change and Iran.
The United States has already
imposed 25% duties on French wine and cheese as part of its
WTO-sanctioned response to illegal EU aircraft subsidies, a move
exporters warned would penalize U.S. consumers while severely hurting
French producers.
Reporting by Sudip Kar-Gupta, Leigh Thomas
and Benoit Van Overstraeten in Paris; Additional reporting by Philip
Blenkinsop in Brussels; Writing by Richard Lough; Editing by Catherine
Evans
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