Donald Trump is trying to protect American-based technology giants from the socialists in Europe who think they are making too much and not paying their “fair share.” After France slapped a tax on digital services, Trump has threatened taxes on French luxury goods like cheeses, beauty products, handbags, and sparkling wines such as champagne.
The U.S. already imposed tariffs worth $7.5 billion on European goods and this latest round of tit-for-tat threatens to escalate the trade war.
The dispute is raising pressure on international negotiators to develop a framework for taxing tech companies whose businesses span the globe. But as the complicated talks unfold, the U.S. is threatening to launch more investigations.
“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies,” Robert Lighthizer, the U.S. trade representative (USTR), said on Monday.
The majority of the roughly 30 businesses that could be affected by digital taxes are based in the U.S., including tech giants Amazon, Google and Facebook.
Certainly, few are shedding tears if Google or Amazon have to pay more to support the extravagant social programs in the EU, but Trump said in London that he would protect American businesses.
Trump told reporters in London on Tuesday that while he was “not in love” with Facebook and Google, (GOOGL) he would defend US businesses.
“I’m not going to let people take advantage of American companies,” Trump said Tuesday. “If anyone is going to take advantage of the American companies, it’s going to be us, it’s not going to be France.”
Meanwhile, the EU apparently won’t take the tariffs lying down.
French Finance Minister Bruno Le Maire said the European Union “would be ready to retaliate strongly” against US sanctions. He told the French radio station Radio Classique that the latest proposal on French products is “unacceptable,” and said he has shared his view with US Trade Representative Robert Lighthizer.
“It is not what one would expect from an ally, it is not what one would expect from the United States,” Le Maire said.
The European Commission backed France. Daniel Rosario, a spokesman, told reporters that the European Union would “act and react as one, and it will remain united.”
I suppose Le Maire means that in the past, the United States would have rolled over and simply allowed the EU to do as they please. In case they haven’t noticed, the U.S. has a president who enjoys fighting more than he enjoys being an ally of the EU. The wisdom of that attitude could be debated, but it’s the reality that European countries should be dealing with.
It’s hard to say at this point whether Trump’s trade wars are helping. Our trade deficit with China is at an all-time high despite the president imposing tariffs on $250 billion in Chinese products. Of course, Trump has gotten China to negotiate new trade deals but so far, he has little to show for it.
Now with the news that it’s likely we’ll have no agreement with China until after the 2020 election, trade may emerge as a secondary issue in the coming campaign. And it won’t be to the president’s advantage.