Earlier this month, France passed a 3% tax that will affect firms such as Facebook and Google that draw about $28 million or more in revenue from digital services in France. The Trump administration then started an investigation under Section 301 of the Trade Act of 1974.
If, after the probe, the U.S. determines the tax is discriminatory or unreasonably targets U.S. firms, Trump could respond with tariffs. Trade experts considered Trump’s most likely response a 100% tariff on French wine — one of the country’s signature, symbolic products.
French Wine Irrelevant
A tariff on French wine is irrelevant. People who drink it are not all that price-conscious.
Rather, this will accelerate Trump's desire to punish the EU.
He will use this as part of his excuse to go after German cars and EU agriculture in general.
The consequences will be significant if this accelerates especially given the precarious state of manufacturing in General and Germany in particular.
- US, Germany, Japan in Manufacturing Recessions: Full-Blown Recessions Coming Up
- Manufacturing Recessions vs Real Recessions: How Much Lead Time Do You Expect?
Question of the Day
Meanwhile, I exit with the question of the day.
Is that a purposely stupid statement by Trump or just plain stupid?
Mike "Mish" Shedlock