Trade war: France hits back over US tariff threat on cheese and champagne – business live

The list of French products that could incur a 100% tariff runs to 63 entries, covering food, drink, fashion, cosmetics and accessories.

It includes 22 different entries for cheese alone, including:

• Fresh cheese, Roquefort, Edam, blue-veined, Gruyere, Romano, Reggiano, Parmesan and Swiss varieties. Even cheddar is mentioned, even though that’s more of a UK delicacy.

The list also includes “Sparkling wine, made from grapes”, which appears to covers France’s champagne production as well as crémant – or fizz from other regions.

On toiletries, the list includes

• Lip make-up, eye make-up, manicure or pedicure preparations, beauty or make-up powders, and various soaps.

It also targets handbags, both with and without shoulder straps, whether they’re made of ‘reptile leather’, patent leather, braid, silk, plastic or other manmade fibres.

The US Trade Representative has also singled out 13 types of porcelain and china, including ranges for hotels and restaurants, and for households. It also singles out decanters, punch bowls, salt and pepper sets, mugs and steins.

Finally, the list includes cast iron table and kitchen products, which could cover Le Creuset-style pots.

You can read America’s ruling against France here.

In it, the US Trade Representative explains that the digital tax is unfair because it discriminates against U.S. digital companies, such as Google, Apple, Facebook, and Amazon.

In addition, the French DST is inconsistent with prevailing tax principles on account of its retroactivity, its application to revenue rather than income, its extraterritorial application, and its purpose of penalizing particular U.S. technology companies

The US is also threatening to launch similar probes into Austria, Italy, and Turkey.

Trade representative Robert Lighthizer said America wants to tackle “growing protectionism”…..

“Indeed, USTR is exploring whether to open Section 301 investigations into the digital services taxes of Austria, Italy, and Turkey.

The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies.”

Rome’s government has proposed a similar digital tax, which would begin in January 2020, taxing large tech firms 3% of their revenue.

Critics of trade wars point out that tariffs are effectively a tax on consumers, as they make imports more expensive.

And if America really does impose this 1o0% tariff, it could mean less French champagne and quality cheese is quaffed and scoffed in the States.

Paul Donovan of UBS fears that Camembert will be off the menu, replaced with processed cheese (and you can’t bake that in the oven with a little garlic and herbs!).

He told clients:

• US President Trump tweeted plans to tax US consumers of French champagne and cheese (and other goods). The sentiment seems to be “let them drink Coke.” Taxing trade is one of the few things the US president can do alone. Trump is branding the Democrats as “do nothing” – we may get more such tweets as a demonstration Trump is “doing something.”
• Substituting Kraft Cheese Slices for Camembert may be a heavy burden. However, earlier tweets re-imposing taxes on US users of Brazilian and Argentinian steel seem even more serious. Companies have spent years believing that they can operate global supply chains. Trust in global supply chains is threatened when a Trump trade deal does not seem to last more than a few months.

The French government is furieux about America’s threat to impose a 100% tariff on some of its most cherished exports.

Finance minister Brune Le Maire has told Radio Classique that the move is “unacceptable”, and not what you’d expect from an ally.

Le Maire also warned that Europe would retaliate, presumable with its own raft of tariffs on American imports.

“In case of new American sanctions, the European Union would be ready to riposte”

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

So much for the season of goodwill! Donald Trump has spooked the financial markets again, with a fresh flurry of tariffs that further escalate his trade war war.

Overnight, the Trump administration on Monday proposed new tariffs up to $2.4bn of French goods. Prized exports, including champagne, cheese, handbags, porcelain, cheeses and yoghurt would incur a new levy of up to 100%.

This swingeing move is a retaliation against France’s new digital services tax, which Washington says unfairly discriminated against American technology companies such as Amazon, Google and Facebook.

US Trade Representative Robert Lighthizer declared that the move:

“sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies.”

The move casts a shadow over today’s meeting of NATO leaders in London, to celebrate the 70th anniversary of the military alliance.

The attack on French exporters came just hours after Trump announced he was raising tariffs on steel and aluminium from Brazil and Argentina, in retaliation for their currencies falling to record lows.

That knocked stocks across the globe, with European stock markets suffering their worst day in two months on Monday. Wall Street also suffered, with the Dow losing almost 1%.

The selloff is now spreading to Asia, where Australia’s S&P/ASX 200 has slumped by over 2%.

Hopes that Trump might secure a trade deal with China had driven markets higher in recent weeks; investors are now worrying that America could take a more belligerent approach. Tariffs restrict trade and drag on global growth, so any escalation is bad news for the global economy.

Jasper Lawler of London Capital Group says Trump’s latest barrage of tariffs has surprised the markets.

The US placing steel and aluminium tariffs on Argentina and Brazil caught markets off guard. Traders have had US-China trade tunnel vision. As Americans would say, this came out of left field.

The new tariffs in South America are a reminder that with Trump as US President, a phase one trade deal with China doesn’t mean global trade just resets to the old status quo.

As I type, France is vowing to hit back, so it could be a tense day….

The agenda

• 9.30am GMT: UK construction PMI for November: Expected to rise to 44.5, from 44.5, showing another contraction