Any headline that uses the phrase “France Warns” immediately requires a background review to understand the big picture driving French fears.
Just like Canadian Prime Minister Justin Trudeau thinking he could outwit President Trump’s policies on NAFTA trade (he failed), Trudeau’s bestie, French President Emmanuel Macron, has stupidly exhibited similar shortsightedness. In the case of both leaders their weasel moves have put their nations’ into a precarious economic position.
To consider the future for France, it would be wise to remember last year when President Trump arrived to attend the G-7 in Biarritz, France, President Macron was waiting at the Hotel du Palais to ambush Trump for an unscheduled luncheon (pictured below):
This was just one example in a series of scripted weasel-moves played by Macron in an attempt to pontificate his importance for the international audience. Another example from the same event was Macron inviting the Iranian foreign Minister to the G7 for sideline meetings unrelated to the topics being discussed in Biarritz.
In an effort to create leverage against the U.S. position, President Macron never discussed his Iranian invitation -in advance- with the U.S. delegation. It did not go over well.
The EU, and specifically France, have a dependence on foreign energy sources as a result of their ridiculous climate policies and narrow thinking. In essence the EU wants to do business and receive oil from Iran; however, U.S. sanctions against Iran forbid those business deals. Ergo Macron attempted to inject influence and position his interests.
As stated, the ambush approach did not go well, but POTUS played it cool.
There have been several other efforts by Macron to undermine U.S. policy out of self-interest. In each attempt President Trump has noted the issue but never actually directly responded to the moves. President Trump continues to speak warmly about Macron but is obviously clear-eyed on the small-man lack of character aspect.
Inside this game of snark and weasel-moves President Trump has refrained from disparaging the weasel yet continually reminded Macron, and other EU leaders, about their continued lack of honoring their obligations: (1) not funding 2% GDP for NATO defense; (2) not taking back ISIS fighters; (3) becoming more energy dependent on Russia for natural gas [Nordstream 2]; (4) one-way tariffs; and (5) not having a trade perspective toward the U.S. based on reciprocity.
As a result of the EU’s intransigent selfishness; in combination with an ongoing attitude of pontificating elitism; President Trump has no disposition to grant any favorable terms on anything. This is the background for United States Trade Representative Robert Lighthizer calculating a $2.4 billion pending tariff against French products as a result of France’s desperation for income and deciding to tax U.S. digital services:
PARIS (Reuters) – French Economy Minister Bruno Le Maire warned the United States on Monday that any retaliation to France’s new digital services tax could “deeply and durably” damage relations.
Washington has threatened to impose duties of up to 100% on imports of champagne, handbags and other French products worth $2.4 billion (1.8 billion pounds) after a U.S. government investigation found the French tax would harm U.S. technology companies.
“If the Americans decide to go ahead and impose sanctions against the digital tax … in this case we would retaliate,” Le Maire told France Inter radio.
“If there were to be sanctions, and it is a possibility that we will take sanctions, we would immediately contact the WTO (World Trade Organisation)”, he added.
Le Maire said he had sent a letter on the issue to U.S. trade negotiator Robert Lightizer and was also going to discuss it with U.S. Treasury Secretary Steven Mnuchin by phone.
“If the U.S were to decide to impose trade sanctions against the EU over the French Digital Services Tax, it would deeply and durably affect the transatlantic relationship at a time when we need to stand united”, the minister wrote in the letter seen by Reuters.
Le Maire also said in the letter that France was “in touch with the European Commission and other EU Member States on the subject” and that they were “contemplating the various options to defend our trade rights in a proportionate and determined manner, as we have in the past,” . (read more)
With the USMCA completed, and with most of the key Asian trade deals finished – sans the watching to see approach with China phase one, the next logical move for President Trump to address the trade imbalance will be to turn attention toward Europe.
The EU is still benefiting from the same trade deals constructed during the Marshal plan. President Trump will use tariffs to fundamentally change this relationship. The WTO already handed the U.S. legal authority against the EU for a $2.5 billion tariff as a result of the Boeing case. Combine that with Lighthizer’s calculated $2.4 billion against France and you can easily see how severe these economic weapons will be.
With Britain leaving the EU; and with Germany, France and Italy already suffering from a lack of investment and shrinking sales of industrial products – the EU economy is a sitting duck for President Trump to target. There is no-way France can lead the charge for a tariff battle against the United States….
As a result watch for them to make geopolitical moves and attempt to threaten Trump over their relationship with Iran in an effort to find leverage. Predictably U.S. media will attempt to position the EU as victims of President Trump just like they did with China in 2018.
However, unlike China, the EU is precariously positioned as a feather vulnerable to the economic hurricane President Trump can unleash. This should be fun.