Washington has threatened to impose additional tariffs on French products in response to the introduction of a tax on US digital giants.
The empire counterattacks. Monday, December 2, the United States threatened to raise tariffs on some French products. A retaliatory measure against the French tax imagined by Bercy to hit the digital giants that largely escape, for now, French taxes. What is this Gafa tax (acronym for Google, Apple, Facebook and Amazon)? Why the United States does not want it? What does France answer? Which French products would be taxed? And why is the tone rising? Franceinfo helps you better understand this escalating trade conflict.
What is this Gafa tax?
Coming into force in 2019, this French tax imposes the digital giants to 3% of turnover in France. This device must bring to the French State some 400 million euros, which may seem derisory in light of the profits made by these companies – Apple announced a little over a month ago an annual profit of more than 55 billions of dollars. The Gafa tax includes targeted online advertising, the sale of data for advertising purposes and the linking of users by the platforms, explains this subject of France 2.
"Only companies exceeding two thresholds (750 million euros of turnover worldwide, 25 million for services provided in France) are concerned", explains the site NextInpact. Suffice to say that the text was tailor-made to hit US platforms around the world, and escape the tax by playing tax optimization and dematerialization of transactions. Also, says NextInpact, "This tax was quickly baptized Gafa tax since all focused on the US digital giants ".
Why the United States does not want it?
In reality, Donald Trump never wanted this tax that hits the US digital giants. Before the G7 held in Biarritz this summer, the President of the United States had immediately threatened to tax French wine if this tax was applied. But a compromise seemed to have been found at the end of the summit. Monday, August 26, in the presence of Donald Trump, President Emmanuel Macron had welcomed having "found a very good agreement". France had thus undertaken to "remove" its Gafa tax if an international tax targeting digital multinationals was adopted by the OECD. Always difficult to define, the American president had not at the time expressed his disagreement. And since, stresses Le Figaro, the United States actively participated in "Negotiations to Harmonize Digital Taxation Globally".
Yet, Monday, December 2, Donald Trump has risen again to defend American companies. The tenant of the White House relies on an investigation opened last July on the Gafa tax by the US Trade Representative. This report "sends a clear signal to France and warns other countries that are finalizing similar measures that discriminatory taxes will not be tolerated", Says the executive director of the Federation of Computer and Communications Industry. Paris could serve as an example before the Trump administration launches investigations against Austria, Italy and Turkey to determine whether their taxes are threatening US companies.
Which products would be taxed?
Among the products that could be surcharged are many cheeses including Roquefort, but also yogurt, sparkling wine and cosmetics, such as soap and makeup or handbags. These surcharges could reach 100%, said the US Trade Representative, whose announcement must still be endorsed by President Donald Trump. This imposition of punitive tariffs can not, however, be made before mid-January, after a period of consultations. Moreover, they would be added to other surcharges on the "made in France" already decided by the United States because of a dispute around the aircraft manufacturer Airbus.
In a statement, the Federation of French Wine and Spirits Exporters (FEVS) called for a "urgent action" from the French government in the face of these "new threats" weighing on the die. With nearly 700 million euros, sparkling wines account for nearly 40% of total exports of French wines in the United States over the last twelve months, she recalls. The French agricultural union FNSEA is also worried. He asked not to be "taken hostage" conflict.
How has France reacted?
Monday, even before the virulent words of the US President, the French Minister of Economy Bruno Le Maire, invited by France Inter, had warned that France would not give up "never" to his tax on the giants of high-tech. He especially insinuated that the Gafa tax was the tree that hides the forest. For him, the United States no longer wants a large international agreement on digital taxation. "After calling for an international solution at the OECD, Washington is not sure of wanting it", he lamented Monday.
The tone is still on Tuesday, the Minister of the Economy denouncing sanctions "Unacceptable" after the threats of the United States. "The French tax is not discriminatory. (…) It includes American companies, but also French companies, European companies and Chinese companies"continued Bruno Le Maire. "The United States must know that if they embark on a new set of sanctions against France, the European Union would be ready to react strongly", he insisted.
For its part, the French Thierry Breton, the new European Commissioner for the Single Market and Digital, went further, suggesting that the US Treasury Secretary could, in fact, announce the withdrawal of the United States from the OECD negotiations .
What are the consequences for these tensions?
In the French financial markets, US threats have hurt the values of luxury on the Paris Stock Exchange. LVMH – which has just got its hands on the American jeweler Tiffany – and Hermes or Kering were in the red Tuesday at midday. For its part, the Stoxx index, which includes most of the major European players in the sector, yields close to 0.8%. The biggest sectoral decline is for the commodities sector, with a decline of 1.7%.
Nevertheless, on the sidelines of the NATO summit, the American president seemed to want to calm the game. "We have a minor dispute, I think we will probably be able to overcome it"said Donald Trump during a meeting in London with Emmanuel Macron. "I think with President Trump we can fix this situation"said the French president, showing confidence.