Anyone hoping for a respite from the trade wars would have been disappointed last week as U.S. President Donald Trump set his sights on a new target: France.
In response to France's digital tax that would take 3% of the total annual revenues of the likes of Google, Apple, Amazon and Facebook for services aimed at French users, Trump proposed 100% tariffs on $2.4 billion worth of French goods, including handbags, Champagne, cheese and makeup.
A Panjiva analysis of import data shows that should that tariffs come into effect, luxury goods majors LVMH and Kering and cosmetics retailer L'Oréal would be hit the hardest. This would add to an increasingly complex picture for the luxury sector, which is in the middle of an M&A arms race while grappling with instability in one of its key markets, Hong Kong.
The tariffs may be a warning to the likes of Austria, Italy and Turkey, which also have been exploring digital taxes. They also provide food for thought for the European Union as a whole. The bloc's own trade negotiations with the U.S. "have been going nowhere fast, and this latest incident doesn't bode well for quick take-up by [EC] President [Ursula] von der Leyen," Peter Allgeier, president of consulting firm Nauset Global LLC and a former deputy U.S. trade representative under the Bush and Obama administrations, told Market Intelligence.
Consumer Edge is a weekly collection of critical developments across the automotive; retail; and food, beverage, and tobacco industries. Drawing on exclusive analysis and value-added content from the Consumer News team at S&P Global Market Intelligence, it is published every Thursday. Click here to subscribe.
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