Trump’s tariff belligerence pays off once more as France capitulates over tech tax

After France unveiled plans to raise taxes on internet companies the US threatened to slap tariffs on French food. Now France is putting the new tax on hold.

Reuters reports that French President Macron had a great chat with his US counterpart Trump, at the end of which Macron offered to suspend the charge while negotiations continue at the OECD over an international taxation system for internet giants such as Google and Facebook. Having caved in less than two months after Trump threatened the tariffs, the smart money has to be on Macron quietly binning his tax and hoping everyone forgets all about it.

Apparently the French have always said anything agreed by the OECD would automatically supersede its own little tax, which makes you wonder why they bothered with it in the first place. If the aim was to show how big and tough Macron is by standing up to Trump you’d have to say it that has backfired somewhat.

Furthermore Macron can’t have been surprised by Trump’s retaliation, since that what he does. If we give Macron the benefit of the doubt we could guess that he was trying to play Trump at his own game by getting his retaliation in first and giving himself additional negotiating chips ahead of the OECD process. Maybe it will pay off but it’s a big gamble since he has now made it clear that he will fold when faced with a show of strength.