France, US move towards temporary truce in trade war

Liz Alderman, Jim Tankersley and Ana Swanson, The New York Times

Posted at Jan 22 2020 11:41 AM

President Donald Trump with President Emmanuel Macron of France at the opening of the G7 Summit in Biarritz, France, on Aug. 24, 2019. France and the US appeared to strike a temporary truce in a trans-Atlantic trade war, French officials said Tuesday, Jan. 21, 2020, after Macron agreed to suspend a tax on American technology giants in exchange for a postponement of threatened retaliatory tariffs on French goods by the Trump administration. Erin Schaff, The New York Times

PARIS — France and the United States appeared to strike a temporary truce in a trans-Atlantic spat, French officials said Tuesday, after President Emmanuel Macron agreed to suspend a tax on American technology giants in exchange for a postponement of threatened retaliatory tariffs on French goods by the Trump administration.

The apparent détente emerged after Macron and President Donald Trump agreed in a phone call late Sunday to grant more time for negotiations over a global solution to taxing Amazon, Facebook and other digital companies.

“We will work together on a good agreement to avoid tariff escalation,” Macron said on Twitter on Monday. “Excellent!” Trump replied on the social media platform.

A deal between the two countries would buy time for the development of an international framework to prevent large multinational companies and digital giants like Facebook, Amazon and Google from avoiding taxes by shifting profits between countries.

Negotiations are continuing at the Organization for Economic Cooperation and Development, but the slow pace of the talks has frustrated European officials — and especially the French government, which has insisted digital businesses must pay “fair taxes.”

France’s finance minister, Bruno Le Maire, said Tuesday at a meeting in Brussels with European Union officials that Macron and Trump had “agreed to avoid all escalation between the US and France on this digital tax issue.” But he cautioned that discussions on finding a compromise “remain difficult.”

Le Maire is scheduled to meet with Treasury Secretary Steven Mnuchin at the World Economic Forum in Davos, Switzerland, on Wednesday to discuss next steps.

The fight is not just limited to France. Silicon Valley’s tech giants are a target for much of Europe. Last summer, the European Commission unveiled a proposal to significantly revamp how the companies are taxed in the 28-nation European Union.

France drew special scorn from Trump after officials announced plans to impose a 3 percent tax starting Jan. 1 on the revenues that companies earn from providing digital services to French users. But Tuesday, Le Maire offered to postpone collection of the tax until the end of 2020, giving time for negotiators at the OECD to hammer out an agreement on a broader framework to tax digital firms.


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