Macron, Trump reach breakthrough in digital tax dispute

French President Emmanuel Macron inspects sniper squad as he attends a military exercise at the military camp of Suippes near Reims eastern France Thursday

"We will work together for a good deal to avoid escalating tariffs", he said.

The White House readout of the call was much more restrained: "The two heads of state and government agreed that it is important to successfully negotiate the tax on digital services" and "to discuss other bilateral issues".

The White House and the US Trade Representative's office did not immediately respond to Bloomberg for for comment.

French President Emmanuel Macron and Donald Trump of the USA agreed a truce in their dispute over digital taxes that will mean neither side imposes punitive tariffs this year, a French diplomat said. The tax was seen as aimed at Apple, Facebook, Amazon and Google and was projected to raise $28 million in France and $832 million worldwide.

The U.S. objected last month that the French tax discriminates against American technology companies. He then threatened to impose tariffs on $2.4 billion in French goods.

In his usual style, Donald Trump quickly promised reprisals in the form of customs taxes on French products, including wine.

A wine importer compared the potential tariffs with the greatest threat to the industry since the ban.

The French Senate in July passed a measure imposing a 3% tax on large tech firms that provide services to French users.

The dispute was another headache for European trade officials scrambling to expand their policy arsenal as the U.S. takes aim at a rules-based system for global trade that Mr Trump argues is outdated and tilted against America. This also coincided with a change in leadership at the European Commission, the EU executive.

After blocking the tech tax talks at the OECD for several years, Washington relaunched them last year only to make proposals in December which France rejected before going ahead with its tax.

"Sounds like a pretty healthy relationship to me", said Hogan in the U.S. capital on Thursday.

Le Maire is due to meet US Treasury Secretary Steven Mnuchin at the World Economic Forum meeting in Davos tomorrow.

Trade relations between the USA and the European Union started to get sour in 2018 when the Trump administration relied on national security issues to introduce tariffs on steel and aluminum from Europe.

The French leader made the announcement of a truce on Twitter.

The EU, meanwhile, is pressing ahead with a plan for tariffs against the USA in a parallel WTO case over unlawful subsidies to Boeing Co.

Macron tweeted earlier Monday that he had a "big talk" with Trump over the issue.

"Europe had enormous obstacles for us to do business with them".



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