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Reports: US, France reach tariff ceasefire in digital tax dispute

U.S. President Donald Trump and French President Emmanuel Macron agreed to back down on threats to impose reciprocal punitive tariffs in 2020 in connection with a dispute over digital taxes, Bloomberg News and Reuters reported Jan. 20, citing a French diplomatic source.

Trump and Macron agreed to allow negotiations to continue at the Organisation for Economic Co-operation and Development until the end of 2020, according to Reuters. The U.S. and France aim to reach a global framework that seeks an appropriate amount of tax on tech companies, Bloomberg News added.

Macron said on Twitter that he had a "great discussion" with Trump regarding digital tax. "We will work together on a good agreement to avoid tariff escalation," he tweeted.

French Economy and Finance Minister Bruno Le Maire said Jan. 20 that he had made "a certain number" of concessions but the negotiations are "far from won," the Financial Times reported.

Macron signed legislation in July 2019 to impose a 3% levy on gross revenues of companies that provide digital services in France. The law applies to companies with total annual revenues from the covered services of at least €750 million globally and €25 million in France.

In December 2019, the Office of the U.S. Trade Representative proposed tariffs on $2.4 billion of French products in retaliation for France's digital tax, saying it discriminates against U.S. tech companies.

Le Maire recently said France would retaliate to punitive measures made by the U.S.