French President Emmanuel Macron and US President Donald Trump on Monday agreed to a truce in their dispute over digital taxes that would mean neither France nor the US would impose punitive tariffs this year, a French diplomat said.
“Great discussion with @realDonaldTrump on digital tax,” Macron said in a tweet. “We will work together on a good agreement to avoid tariff escalation.”
Trump, on Twitter, responded “excellent!” to Macron’s post, without providing any more details.
A White House readout of the telephone call was notably more muted, saying only that the “two leaders agreed it is important to complete successful negotiations on the digital services tax” and “discussed other bilateral issues.”
Still, the possible respite might defuse transatlantic tensions that had been building between Washington and Brussels along another potential trade dispute front.
Last week, Trump signed a ceasefire with China in “phase one” of a broader deal aimed at balancing trade between the world’s two largest economies.
The EU is an even bigger US trading partner than China and supply chains between the two economies, particularly in the automotive and financial services industries, are intertwined in ways that would make a tit-for-tat tariff dispute even more harmful to the world economy.
France and the US would continue negotiations along with their European partners until the end of this year to agree a global framework that ensures tech companies pay an appropriate amount of tax, the French diplomat said.
Macron’s government still hopes to find a solution that fits within discussions at the Organisation for Economic Co-operation and Development’s (OECD) work on the issue, the official added, asking not to be identified in line with French government rules.
European finance ministers meeting in Brussels yesterday were to discuss progress of the OECD talks.
While the OECD is still working on its proposal for taxing tech companies around the world, France pushed ahead with its own levy last year that hit US Internet giants such as Google, Apple Inc and Amazon.com Inc.
The US objected, alleging on Dec. 2 that the French tax discriminates against US technology companies, citing Section 301 of a 1974 US law that Trump has thus far reserved to justify tariffs against China.
That opened the door to the US’ threat to hit US$2.4 billion of French goods with tariffs in retaliation.
Among the French products targeted with duties of as much as 100 percent were luxury items such as wine, cheese and makeup.
One US wine merchant called it the biggest threat to the industry since Prohibition a century ago.
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