Trump and Macron declared a ceasefire on the escalating trade war over France’s anti-tech tax
- Presidents Trump and Macron have reached a ceasefire in their escalating trade war.
- The fight began in July when France approved a 3% tax on revenue generated by large digital companies operating within the country, primarily targeted at Silicon Valley giants like Amazon, Facebook, and Google.
- Amazon, Facebook, and Google have been criticized for minimizing their corporate tax in Europe by channelling sales through low-tax countries such as Luxembourg.
- The Trump administration claimed the tax was unfair because it disproportionately impacted American firms and threatened tariffs on French goods including cheese and wine.
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Trump and Macron have declared a temporary truce on the ongoing trade spat between France and the US, sparked by France’s threat to tax the major US tech firms.
President Emmanuel Macron tweeted on Monday saying he and Trump had had a “great discussion” about France’s proposal for a digital tax. “We will work together on a good agreement to avoid tariff escalation,” he added.
Great discussion with @realDonaldTrump on digital tax. We will work together on a good agreement to avoid tariff escalation.
— Emmanuel Macron (@EmmanuelMacron) January 20, 2020
Trump responded to the tweet with just the word “Excellent!”
France passed a bill in July 2019 which would impose a 3% tax on any revenue made by large digital companies operating in France such as Google, Facebook, and Amazon, exacting roughly €500 million, ($563 million) per year.
The major US tech firms have been criticized for arrangements that minimize their tax payouts in Europe by channeling sales through low-tax regimes like Luxembourg.
The Trump administration responded aggressively to France’s plans for the tax, immediately ordering an investigation into whether it was discriminatory against US companies and threatening to levy retaliatory tariffs on French goods like wine, cheese, and champagne.
Bloomberg reports that following Macron and Trump’s discussion neither country will impose tariffs this year, although White House officials would not confirm whether tariffs had been permanently shelved.
French finance minister Bruno Le Maire told reporters in Brussels prior to the meeting the digital tax remains a “difficult negotiation.”
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