Proper Revenge: How Should Trump Respond to France?

-edited

Trump is hopping mad at France over a digital service tax. How should he respond?

Trade War Re-Erupts in London

Foreign Policy reports U.S.-Europe Trade War Re-Erupts in London

Relations between the United States and its oldest ally, France, were dealt a one-two punch Tuesday after U.S. President Donald Trump lambasted French President Emmanuel Macron for his “very, very nasty” comments about NATO only hours after the Trump administration threatened big tariffs on billions of dollars’ worth of prestige French exports.

And as ugly as the war of words over NATO was at the summit in London, the fight over trade could go on even longer, with Trump reacting harshly to Macron’s imposition of a digital services tax that will hit big U.S. tech firms like Google and Amazon.

The Trump administration late Monday released the findings of its investigation into the French law and found that it is “unreasonable, discriminatory, and burdens U.S. commerce.” France argues that the law, which also affects European and Chinese firms, isn’t meant to target U.S. tech giants.

In response, the administration drew up a list of $2.4 billion worth of high-end French exports—from Gruyere cheese to handbags to champagne—that could be hit with tariffs of up to 100 percent by early next year in retaliation.

Digital Tax Tweet

This feud goes back to August and this Trump Tweet.

Proper Response

Tariffs? Forget About It.

Wall Street Journal writer James Freeman discusses the opportunity in Where’s a Trump Tweet When We Need It?

Rather than punishing U.S. consumers, Mr. Trump should consider spending more time belittling French policy makers. Step one is to explain why the United States creates great technology companies and France doesn’t.

According to Forbes magazine, the two richest people in the world are U.S. technology entrepreneurs. And there are five more American founders of digital enterprises in the top 15. Meanwhile, the richest people in France create lovely handbags.

Surely there’s some fun to be had at Mr. Macron’s expense, while reminding both American and French entrepreneurs that the U.S. is a better place to do business.

A better retaliation than raising costs on U.S. consumers would be for the President to announce upon his return home that the United States is raising the number of visas available to French tech workers. Recruiting France’s most talented people and allowing them to invent and live well in the U.S. is the best revenge.

Perfect Solution

Freeman comes up with the perfect solution: Mock France - Invite the French Over.

Instead, Trump is on a fool's mission of hiking tariffs. The "Tariff Man" is on a tariff binge.

Mission Impossible

Trump is also worried about IP theft. But if US businesses don't care enough to stop doing business in China, nothing will change.

Besides, It's Mission Impossible Fight to Stop Theft of Ideas in the first place.

Michael Pettis at China Financial Markets also has the correct idea:

"The great strength of the US is its restless and at times uncomfortable creativity and innovation, driven by a complex set of legal, financial, political, cultural, educational and other institutions that few countries have been able to match, and which is why foreigners come to the US to create the billion-dollar companies that they cannot anywhere else. The US didn’t get rich by preventing the spread of technology but rather by staying ahead of it."

US Technology

The US has the top four IP spots globally and 7 of the top 12. Germany is the lone EU entry at spot 12.

Q. Why is that?

A: The US has the largest, most open, capital markets in the world. Google, Apple, and Microsoft could not exist in the EU because the EU would bust them up in the name of competition.

Open for Business!

Instead of whining or retaliating with foolish taxes on French wine, make like China. Invite the best French innovators we can find to the US.

Mike "Mish" Shedlock

Comments (46)
No. 1-23
Jojo
Jojo

I love how Macron trolls Trump!

Sechel
Sechel

Trump has one tactic, brinkmanship. He keeps opening up new trade wars before resolving old ones. Probably thinks its useful to create enemies to unite his base , that's the hallmark of a demagogue.

France did make one mistake however. They instituted their tax before the EU approved a plan. France would have had a better position if they had waited and it would have been a mere months.

As far as what Trump should do. He should resign. We keep seeing more of the same and its not working, the very definition of insanity. His goal is to negotiate bilateral deals where our trading partners guarantee a set amount of American purchases while Trump provides protection to aging American businesses. Hard to see Trump as anything more than a socialist and planned central economic planner.

Sechel
Sechel

Ironically Trump argued in 2016 that the world doesn't respect the United States and we had bad relations. It's really strains credulity for him to say we've improved our standing under his leadership, unless you count Russia and North Korea as examples and that further strains logic

MickLinux
MickLinux

"The US didn't get rich by preventing the spread of technology, but by staying ahead of it".

Well, yes... but starting with NAFTA and the WTO, and then with IP law updates and even the click-contract laws, the US committed to a new track of preventing the spread of tech, especially among Americans. In a way, even the committment to prop the stocks at the cost of commoners and savers, is a commitment to stop tech in its tracks. So now we won't be able to stay ahead.

leicestersq
leicestersq

"Google, Apple, and Microsoft could not exist in the EU because the EU would bust them up in the name of competition."

I really hate the EU, but if these firms were broken up into smaller pieces, that would be a good thing. And I would start with Amazon.

sangell
sangell

I've learned to listen to what Trump actually says and not rely on press reports. Trump made it plain yesterday that tariffs will be imposed in lieu of NATO members shirking their own declared policies to commit at least 2% of GDP for defense. Now maybe Mish is content with the US underwriting European security but I'm not. If levying tariffs on French luxury goods wrings a few hundred million in revenue for the US Treasury its a good thing. So what if a $1500 Louis Vuiton handbag now costs the status seeking American $2000?

Quatloo
Quatloo

BoJo is now proposing the same type of digital services tax in the UK that Macron has in France. He is proposing 2% vs the 3% France wants.

KidHorn
KidHorn

We should just let Europe commit suicide. Not that we could stop them.

njbr
njbr

Who knew Trump could be so prescient when he said, "The world laughs at the US".

How dare the world reject rightful US leadership that has become more suspect every year since 9/11 and the bleat to NATO for help? The world is a big place and the position of being a fool for Trump is not a place any leader wants to be, including Xi. This President doesn't work for a win/win solution and the only people willing to show fealty to Trump are the weak ones who admit defeat (Big wins!!...Guatemala moves their embassy to Jerusalem, Guatemala bows to Trump demands on immigration short-stop...)

It was quite clever how Macron got Trump to speak up for NATO--use the child-psych move of saying the opposite of what you want to a difficult child. "Don't thrown me into the brairs, Mr Fox..."

Tariffs, tariffs, tarrifs...everybody has tariffs to give. Surprising that the economy has grown with so little reliance on tariffs...it must be the new QE for growth and killing deficits.

njbr
njbr

You know what...NATO was set up so we would "fight them there, as opposed to here". You might note that during the "cold war" there was plenty of back-and-forth between Europe and the Soviet Union, as opposed to the US and Soviet Union. The fear was greatest in the US. And in the modern era, NATO has been dragged into wars far from their shores in unpopular police actions all because of US arm-twisting. It's all very far from the ravening hordes from Siberia that NATO was set up to fight. Europe is to shut up and shore up NATO to do what the US wants.

Well there is very little belief in Europe that Russia will be anything more than the nettlesome supplier of their natural gas that needs to be handled with strict diplomacy and sanctions, because, after all, Russia's most powerful citizens desire the sleek life available in Europe. The weakness and poverty of Russia is apparent on their doorstep.

And given that Trump appears to be in the thrall of Putin, the irony of NATO funding is even greater. The cost/benefit of NATO becomes worse for Europe as the more unpleasant and counter-Europe Trump becomes.

It is a different world now.

Tony Bennett
Tony Bennett

"How Should Trump Respond to France?"

...

Well, after much consideration - and with full support of MIC - Storm the Beaches of Normandy.

History likes to repeat, you know ...

awc13
awc13

This is all interesting to observe. Trumps tariffs/tweets/whatever are simply another dimension to the constant worldwide economic competition. some people will benefit and some will not from whatever he does

Zardoz
Zardoz

Trump is hopping mad because Marcon called him on his "ISIS is dead" BS on camera. He's getting mocked by world leaders openly now... the guy that campaigned on "America is a laughingstock."

Zardoz
Zardoz

"I’ve always said American wine is better than French wine!"

He's also always said he doesn't drink. Dementia is like being drunk for free, all the time.

LB412
LB412

I listened to Wilbur Ross speak to this topic yesterday. He stated that the US is not necessarily against a tax of this type just the application the French have chosen. Essentially the revenue thresholds the French put in place are so high that only the American companies are subject to the tax. He said if they apply to companies of all sizes we (the administration) would have a difficult time arguing against the concept.

RagingFury
RagingFury

A very wise suggestion. Now how to get the word to the President!

Mish
Mish

Editor

"I've learned to listen to what Trump actually says and not rely on press reports. Trump made it plain yesterday that tariffs will be imposed in lieu of NATO members shirking their own declared policies to commit at least 2% of GDP for defense. Now maybe Mish is content with the US underwriting European security but I'm not."

@sangell should learn to read. I have repeatedly suggested the US pull all troops out of Europe, Japan, and in fact everywhere.

I have repeatedly stated the US cannot afford to be the world's policeman. Indeed I would be happy if Trump did what he proposed and pull the US out of NATO.

Mish

RonJ
RonJ

"Trump is also worried about IP theft. But if US businesses don't care enough to stop doing business in China, nothing will change."

How many Americans care that China runs concentration camps? On another comment board, someone mentioned that it was like standing room only at the Apple store.

Six000mileyear
Six000mileyear

Inviting French entrepreneurs ( and entrepreneuse) would have been an excellent response. But often it takes time to come up with the perfect response.

From my personal experience when I am asked to respond to questions asked by upper level management, my immediate response would be, "That question exposes your ignorance about projects you manage. Trying to teach you what you should have learned in college, or at least before being offered your present position, is a complete waste of time."

After stewing for 30 minutes I usually end up drawing a picture with crayons and labeling items with monosylabic words. Most of the time they go back to sucking their thumbs.

Captain Ahab
Captain Ahab

Simple solution, reduce the US's contribution to the average of other countries, no more, no less.

Mr Bean
Mr Bean

--> "Trump is hopping mad at France.... How should he respond?"

Do nothing. Just let France fail.

There are far more important things to worry about, both globally and inside the US.

Google and the like can just raise prices within France to cover the added costs of doing business in France -- or they can stop doing business there. Either way, France loses not the rest of the world.

Trump shouldn't let a failed state like France distract him.

abend237-04
abend237-04

I wish Trump would take this opportunity to gore yet another political sacred cow...the notion that governments tax corporations. They don't. What they do is lever the power of the state to use corporations as tax collectors.

I'll even draft the twitter for him:

Dear President Macron, After further reflection, I may have been too hasty in summarily rejecting your proposed tax on our corporations. I believe the Occam's Razor approach to this matter is for me to simply establish an offset account crediting France with all future payments in arrears on French NATO defense spending. When the present debit balance of roughly $800 Billion has been paid, call me. We can discuss future options over lunch.