On Tuesday (3/12), The President of the United States of America, Donald Trump, stoked what could be another huge trade conflict with the European Union, as the latest proposed round of tariffs for European luxury products may potentially affect more than $2,4 billion of imports after concluding that France’s digital services tax unfairly discriminated against American technology companies. The administration had made a list of $2.4 billion worth of prestige France exports, from Gruyere cheese to handbags and champagne. From early next year, in retaliation, those prestige France exports could be struck with big tariffs ranging up to 100 percent. In addition, US trade representatives are looking into further tariffs for German, Spanish, and Italian goods.
Increasing spotlight on the digital tax and U.S. tariffs shows a fundamental disagreement between the superpowers on how to deal with multinational digital giant enterprises - most of them are owned by Americans – with huge influence over European soil. Shares in the Asia-Pacific region tumbled after the announcement, with Australia’s S&P/ASX 200 falling 2.3 per cent, The Hang Seng index 1.4 per cent, The CSI 300 of Shanghai and Shenzhen-listed flattened, and Tokyo’s Topix 0.5 per cent.
However, France officials also persist that they will go ahead as planned with the digital tax notwithstanding U.S. threats, and other countries including the U.K., Turkey, Spain, Italy, and Canada all have plans to enforced digital taxes or proposals to do. Early on Tuesday, French finance minister Bruno Le Maire called the Trump administration’s latest threat “unacceptable”. In other news, US is still struggling to reach a much-vaunted interim deal to pause its trade war with Beijing. As Trump continues with his aggressive stance on trade diplomacy, investors seem pessimistic with the way US treats its international trade. However, the head of the European Commission Ursula von der Leyen said on Wednesday that the EU are still open to further discussion to defuse the conflict.
Sources
Reuters
Financial Times
Wall Street Journal
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