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France says EU ‘must be ready to react’ to US trade tariffs

France, along with the UK and Germany -- the European Union's three largest economies -- agree on the need to be "ready to react" to trade tariffs imposed by the United States, France's presidency said Sunday.

France says EU 'must be ready to react' to US trade tariffs
Photo: AFP
“The EU must be ready to react, if necessary, with efficiency and speed,” it said in a statement after telephone talks between French President Emmanuel Macron, German Chancellor Angela Merkel and Britain's Prime Minister Theresa May on the potential impact of new US tariffs.
   
Crippling US tariffs on steel and aluminium are set to take effect on Tuesday, and key trading partners including the EU have urged the White House to exempt them from the additional cost. 
   
US President Donald Trump met last week with Macron and Merkel but gave no indication of whether or not he planned to exempt the EU, which last year exported over $7.7-billion of steel and aluminium to the US market. 
   
Eurozone powerhouse Germany last week said it expected Washington to impose the tariffs from May 1, although a key economic advisor to Trump hinted Thursday that concessions might be made to the EU.
 
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'There will only be losers': France laments Donald Trump's new trade tariffsPhoto: AFP

  
“It's very important that somany of our friends make some concessions with respect to trading practices, tariffs and taxes,” National Economic Council Director Larry Kudlow told CNBC.
   
He pointed to concerns about “equal treatment of automobiles” in the EU as an example.
   
Macron, Merkel and May discussed the tariffs and said they “hope the United States doesn't take measures contrary to transatlantic interests,” the Elysee statement said.  
   
Trump imposed the tariffs last month on national security grounds, saying cheap imports were undermining US producers crucial to military preparedness, but gave a temporary reprieve to the countries that are the main suppliers to the US market. 
 
The measures were targeted primarily at overproduction by China, which has been the key focus of Trump's combative trade policies.
   
The EU has threatened to impose their own punitive tariffs on key US goods if they are not shielded from the steel and aluminium duties.
   
In a state visit to Washington last week, Macron called for cooperation among allies on trade. 
   
“You don't make trade war with your allies,” Macron warned addressed the US Congress.
   
The three EU leaders also discussed the Iran nuclear deal, which Trump has threatened to scrap, the French presidency said.

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TAX

Trump orders investigation into France’s planned tax on tech giants

US President Donald Trump has ordered an investigation into France's planned tax on internet services that will hit American tech giants especially hard, officials said Wednesday.

Trump orders investigation into France's planned tax on tech giants
Photo: AFP
The investigation into unfair trade practices could pave the way for Washington to impose punitive tariffs, something Trump has done repeatedly since taking office.
   
“The United States is very concerned that the digital services tax which is expected to pass the French Senate tomorrow unfairly targets American companies,” US Trade Representative Robert Lighthizer said in a statement.
   
The proposed three percent tax on total annual revenues of companies providing services to French consumers only applies to the largest tech companies, “where US firms are global leaders,” the trade representative's office said.
 
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France to introduce tax on big US tech firms in JanuaryPhoto: AFP

The so-called Section 301 investigation is the primary tool the Trump administration has used in the trade war with China to justify tariffs against what the United States says are unfair trade practices.   

USTR will hold hearings to allow for public comment on the issue over several weeks before issuing a final report with a recommendation on what actions to take.
   
Despite the objections to the French tax proposal however, the statement said the United States will continue to work with other advanced economies to address the conundrum of how to tax tech companies.
   
The Group of 20 has tasked the Organization for Economic Cooperation and Development with finding a fix in the international tax system that has allowed some internet heavyweights to take advantage of low-tax jurisdictions in places like Ireland and pay next to nothing in other countries where they make huge profits.
   
The Computer & Communications Industry Association on Wednesday applauded the US Trade Representative's move, saying the tax would retroactively require US internet giants operating in France to turn over a percentage of their revenues from the beginning of this year and violates international trade commitments.
   
“This is a critical step toward preventing protectionist taxes on global trade,” CCIA official Matt Schruers said in a statement.
   
“CCIA encourages France to lead the effort toward more ambitious global tax reform, instead of the discriminatory national tax measures that harm global trade.”
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