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US has a trade deficit with France. So potentially there is more to loose for France in case of a trade war: https://www.census.gov/foreign-trade/balance/c4279.

US has a trade deficit with France. So potentially there is more to loose for France in case of a trade war: https://www.census.gov/foreign-trade/balance/c4279.html https://www.census.gov/foreign-trade/balance/c4279.html And generally speaking the US has a trade deficit with Europe: https://ustr.gov/countries-regions/europe-middle-east/europe/european-union https://ustr.gov/countries-regions/europe-middle-east/europe... My understanding of the economic system between the US and the world is that other countries support the US dollar by using it for trade, and that the US in turn is able to print a lot of US dollars that can be used by american consumers to buy goods from the world. Could other countries retaliate to US trade tariffs by dedollarizing trade?

nolok 7y ago
The EU already does a fair amount of trade in euro. Also, it's important to understand that for France this is a very important issue of fairness. Not just for political gain, but at the street level. We are one of the best countries in the world in terms of change between income inequality pre and post tax redistribution (meaning while we're not terrible but not great either in terms of income inequality pre taxes, post taxes and redistribution we jump to one of the best overall). This law is not anti US (again like in my other comment: 11 of the 26 companies that fit the criterias are not from the US, several are EU based, and 4 are even french), it's merely making sure each pay (what wes believe to be) their fair share compared to the value they extract, and thus finally acting on the loophole that is "everyone knows and act like data is all the value / tax agencies should act like data has no value whatsoever so it can leave without being taxed". It's not even a move against the weird licencing trick "à la" Starbucks or anything like that, it's merely a tax on data extracted. Either it has value, and it should be taxed, or it doesn't (or not enough) and then it's fairly easy to stop extracting it.
- jklepatch 7y ago
  I wasnt trying to defend the US position. I actually think the position of France makes sense. I just wanted to present a strategic view of the situation. At this level, its not really a matter of who is right, and more of who has the power to do what.
fajr_rd 7y ago
As I see it, France may benefit from its trade with the US because it has a global trade deficit so the extra dollars from America can be used to buy, say, oil from the Gulf. But for Germany and for EU as a whole (or China etc), the surplus dollars will probably never be used to buy anything useful so these exports look like a tribute offered to US.
throwaway925 7y ago
Trade balances aren't really a good measure of who is winning and losing. The more trade, the bigger the welfare gains. Shutting trade in order to close a trade deficit is bad policy. I understand that Trump uses that threat in order to get more favourable terms for the domestic producers, but I am sure he's aware of the mutual damage of blocking trade altogether.
geocar 7y ago
Not sure I agree with the analysis, at least on France. France's top exports to the US are aircraft parts and beverages (wine). Since the US needs those parts to export the (assembled) planes, I think the aircraft lobby (e.g. Boeing) will press hard to prevent a tariff here because it'd raise rates across the board, so that leaves wine: My hunch is even a 100% tariff on wine is unlikely to dissuade anyone from purchasing French wine -- the American wine is better, so the only people buying it are people who really wanted French wine anyway oh là là. I don't know yet what I think about a trade war with all of Europe though.
- jklepatch 7y ago
  Thanks for this precision. Knowing this detail about aircraft parts seems to change the dynamic though. I have to disagree with one point though: “American wine is better than French wine....” (gulp!).
  - rusk 7y ago
    Maybe white wine, but reds? Euch Merlot ... EDIT though I do like a nice Zinfandel, the sheer range offered by the French producers is unmatched.
    - jklepatch 7y ago
      I might have to try more american wine before making a definite opinion. Where are the best wine produced in america? California?
  - geocar 7y ago
    A certain amount of that is certainly tongue-in-cheek. I think if you compare a $20 wine in California to a €10 wine you buy somewhere along the Garonne, you're probably going to enjoy the French wine more. But we're talking about what changes buying-behaviour, and it's important to consider that as a savvy shopper in the US you can go into a wine shop and buy everything under $20, and you'll find local wins. That's how you anchor your expectations about prices and quality. Now whether that's because of duty/import or it's because of shipping, or it's simply because only big brands will bother exporting is, or any other reason, those reasons are out of scope simply because a tariff isn't going to change them in the slightest.
olivepistacchio 7y ago
the trade deficit is rather small though and France could easily make up for it through additional taxes.

nolok 7y ago

The EU already does a fair amount of trade in euro. Also, it's important to understand that for France this is a very important issue of fairness. Not just for political gain, but at the street level. We are one of the best countries in the world in terms of change between income inequality pre and post tax redistribution (meaning while we're not terrible but not great either in terms of income inequality pre taxes, post taxes and redistribution we jump to one of the best overall). This law is not anti US (again like in my other comment: 11 of the 26 companies that fit the criterias are not from the US, several are EU based, and 4 are even french), it's merely making sure each pay (what wes believe to be) their fair share compared to the value they extract, and thus finally acting on the loophole that is "everyone knows and act like data is all the value / tax agencies should act like data has no value whatsoever so it can leave without being taxed". It's not even a move against the weird licencing trick "à la" Starbucks or anything like that, it's merely a tax on data extracted. Either it has value, and it should be taxed, or it doesn't (or not enough) and then it's fairly easy to stop extracting it.

jklepatch 7y ago
I wasnt trying to defend the US position. I actually think the position of France makes sense. I just wanted to present a strategic view of the situation. At this level, its not really a matter of who is right, and more of who has the power to do what.

fajr_rd 7y ago

As I see it, France may benefit from its trade with the US because it has a global trade deficit so the extra dollars from America can be used to buy, say, oil from the Gulf. But for Germany and for EU as a whole (or China etc), the surplus dollars will probably never be used to buy anything useful so these exports look like a tribute offered to US.

throwaway925 7y ago

Trade balances aren't really a good measure of who is winning and losing. The more trade, the bigger the welfare gains. Shutting trade in order to close a trade deficit is bad policy. I understand that Trump uses that threat in order to get more favourable terms for the domestic producers, but I am sure he's aware of the mutual damage of blocking trade altogether.

geocar 7y ago

Not sure I agree with the analysis, at least on France. France's top exports to the US are aircraft parts and beverages (wine). Since the US needs those parts to export the (assembled) planes, I think the aircraft lobby (e.g. Boeing) will press hard to prevent a tariff here because it'd raise rates across the board, so that leaves wine: My hunch is even a 100% tariff on wine is unlikely to dissuade anyone from purchasing French wine -- the American wine is better, so the only people buying it are people who really wanted French wine anyway oh là là. I don't know yet what I think about a trade war with all of Europe though.

jklepatch 7y ago
Thanks for this precision. Knowing this detail about aircraft parts seems to change the dynamic though. I have to disagree with one point though: “American wine is better than French wine....” (gulp!).
- rusk 7y ago
  Maybe white wine, but reds? Euch Merlot ... EDIT though I do like a nice Zinfandel, the sheer range offered by the French producers is unmatched.
  - jklepatch 7y ago
    I might have to try more american wine before making a definite opinion. Where are the best wine produced in america? California?
- geocar 7y ago
  A certain amount of that is certainly tongue-in-cheek. I think if you compare a $20 wine in California to a €10 wine you buy somewhere along the Garonne, you're probably going to enjoy the French wine more. But we're talking about what changes buying-behaviour, and it's important to consider that as a savvy shopper in the US you can go into a wine shop and buy everything under $20, and you'll find local wins. That's how you anchor your expectations about prices and quality. Now whether that's because of duty/import or it's because of shipping, or it's simply because only big brands will bother exporting is, or any other reason, those reasons are out of scope simply because a tariff isn't going to change them in the slightest.

olivepistacchio 7y ago

the trade deficit is rather small though and France could easily make up for it through additional taxes.