French president Emmanuel Macron and US president Donald Trump appeared to have eased tension over France’s digital services tax following a phone call ahead of this week’s Davos economic forum.
Macron said in a tweet, ‘Great discussion with @realDonaldTrump on digital tax. We will work together on a good agreement to avoid tariff escalation.’
US and French officials told the Wall Street Journal that France had agreed to pause its digital services tax until the end of 2020, in return for a ceasefire on retaliatory tariffs. However, the ceasefire was not officially confirmed by the US government.
US trade officials had threatened to raise tariffs by ‘up to 100%’ on a range of French goods, including Champagne and sparkling wine, Roquefort cheese and luxury handbags.
Tariffs at that level would mean price rises for US wine lovers and could have a potentially devastating impact on US importers and merchants, said US wine industry representatives at a public hearing earlier this month.
The US is also the largest export market for Champagne in value terms, worth around 577m euros in 2018.
‘100% tariffs’ still a threat in Airbus case
While Macron’s comments will be welcomed by Champagne houses and importers, nearly all EU wines could still face extra tariffs in a separate dispute between the bloc and the US over Airbus subsidies.
US officials imposed 25% tariffs on still wines from France, Spain, Germany and the UK, at 14% abv or below, on October 18 last year.
The US received clearance from the World Trade Organisation to levy $7.5bn in tariffs to compensate for illegal subsidy payments to Airbus, the European competitor to Boeing.
Since then, the office of the US Trade Representative (USTR) has raised the stakes by floating the prospect of 100% tariffs on nearly all wines from the European Union; a move that has caused ‘panic’ among many small-scale US importers, according to industry officials.
That case was ongoing at the time of writing, although both the US and EU have said they would prefer to negotiate a deal.