US facing new front in trade conflict

Trump threat to hit back at French tax prompts Macron warning on EU action

Battle lines are being drawn for a possible trade war between the European Union and the United States after US President Donald Trump’s threat to put 100-percent tariffs on French goods such as Champagne and cheese prompted French President Emmanuel Macron to declare that any such measures would be treated as an attack on all of Europe.

France intends to place a tax on global technology companies such as Facebook and Google, saying digital revenues are taxed unduly lightly compared with their “real-life revenues”.

This plan provoked an instant reaction from Washington and the matter has escalated into a public dispute overshadowing the gathering of global leaders in London to mark the 70th anniversary of the NATO strategic alliance.

“We’ll see where the discussions lead in the coming weeks, but it will involve a European response,” Macron told Trump at a meeting in London. “Because, in effect, it wouldn’t be France that is being sanctioned or attacked but Europe.”

France, he said, should not be singled out. “My first question is what will happen with the United Kingdom, which adopted the same tax? For Italy, the same tax? Austria, Spain… If we’re serious, those countries will have to be treated the same way,” Macron said.

Trump has pledged to play hard, and defended US interests. “I’m not in love with those (tech) companies, but they’re our companies,” he said.

The timing could hardly be more awkward, with Trump having already complained about European reliance on US military support through NATO and made no secret of his opposition to the EU as an institution.

Earlier this year, in an interview on Fox Business, he referred to Margrethe Vestager, the EU antitrust commissioner who has pursued some US tech giants over their taxes as somebody who “hates the United States perhaps worse than any person I’ve ever met”.

In a CBS interview in October, he said: “Nobody treats us much worse than the European Union … it was formed in order to take advantage of us on trade, and that’s what they’ve done.”

Perhaps surprisingly, given his closeness to Trump and the fact Britain would pin so many economic hopes on its relationship with the US should it leave the EU, Prime Minister Boris Johnson backs the idea of a digital services tax, which could initially raise almost 500 million pounds ($652 million) a year. The plan is in his Conservative Party’s manifesto for the Dec 12 general election.

“On the digital services tax, I do think we need to look at the operation of the big digital companies and the huge revenues they have in this country and the amount of tax that they pay,” Johnson said. “We need to sort that out. They need to make a fairer contribution.”

The main opposition Labour Party has also said it would put a tax on multinationals, mentioning Amazon, Facebook and Google by name in a news release on the topic.

Trump is a vocal supporter of Britain’s attempts to leave the 28-member trading bloc, and has also spoken of how trade between Italy and the US, which has a huge expatriate Italian community, is being held back by “burdens, as unfair as they are, imposed by the European Union”.

French Finance Minister Bruno Le Maire called the threat from Washington “simply unacceptable”.

“It’s not the behavior we expect from the United States toward one of its main allies,” said Le Maire, adding that EU-wide measures would be considered if the threat is followed up.