Trump Hints No Trade Deal Until After The Election, Threatens Tariffs On French Wine

Speaking to reporters on Friday afternoon at the White House, President Trump said he "might" impose tariffs on wine from  France as a "substantial reciprocal action" after France imposed a new digital tax that affects U.S. technology companies.

“It might be on wine, it might be on something else,” Trump, clearly in his element, told the press corps.

On Thursday, French President Emmanuel Macron signed into law a 3% tax on the revenue of technology giants like Facebook and Amazon; the tax, which is retroactive to January, affects companies with at least 750 million euros in global revenue and digital sales of 25 million euros in France. About 30 businesses would be affected; while most are American, the list also includes Chinese, German, British and even French firms.

“We tax our companies, they don’t tax our companies,” Trump said; France’s tax, and Trump’s response, threaten to further strain trans-Atlantic ties as the U.S. and European Union prepare to negotiate a limited trade agreement on industrial goods.

Last month Trump promised to do "something" about French wine that he said is allowed into the U.S. virtually tariff-free while France imposes duties on U.S. wine, calling the arrangement unfair. In reality, Bloomberg reports that the US charges a tariff of 5 cents per 750 milliliter bottle of imported still wine and 14 cents for sparkling wine, according to the Wine Institute, an advocacy group for California winemakers. European Union tariffs for imported wine range from 11 cents to 29 cents per bottle, according to the group.

For now, France hasn’t indicated it will back off from its planned digital tax even after the U.S. suggested it may use trade tools against the levy.

Also on Friday, the U.S. said it will examine whether the tax would hurt its tech firms, using the so-called 301 investigation, the same tool Trump deployed to impose tariffs on Chinese goods because of the country’s alleged theft of intellectual property. Trump’s tweet was followed by a White House statement saying the U.S. is “extremely disappointed” by the tax. In addition to the 301 probe, the Trump administration is “looking closely at all other policy tools,” said spokesman Judd Deere.

“The Trump administration has consistently stated that it will not sit idly by and tolerate discrimination against U.S.-based firms,” Deere said.

France - which argues that the structure of the global economy has shifted to one based on data, rendering 20th-century tax systems archaic - became the first country in the EU to impose such a tax with other nations, including the U.K. and Germany, contemplating similar taxes. France had pushed for a EU-wide digital levy that was scrapped when four countries - Sweden, Finland, Denmark and Ireland - declined to sign off on it.

Separately, Trump also touched on the ongoing US-China trade conflict, strongly hinting that a trade deal may not be reached until November 2020, if then.

Trump said that China may wait until after the 2020 U.S. presidential election to sign a trade agreement because Beijing would prefer to reach a deal with a Democrat.

"I think that China will probably say, ‘let’s wait,’” Trump told reporters in the Oval Office on Friday. “When I win, like almost immediately, they’re all going to sign deals." Which, of course is wonderful news for stocks which will rally for almost a year and a half on hopes of an "imminent" trade deal, much as they have rallied for the past year.

U.S. Trade Rep Robert Lighthizer and Steven Mnuchin are set to travel to China (Shanghai, not Beijing) Monday for the first high-level, face-to-face trade negotiations between the world’s two biggest economies since talks broke down in May. It will be the first encounter between officials from the two nations since Trump and Xi Jinping met at the G-20 summit in Japan last month and declared a tentative truce in their year-long trade war.

Finally, since Trump has a tendency to cover absolutely every topic, he also covered the ongoing debate whether the US will intervene do weakne the dollar, saying "I didn’t say I’m not going to do something’ on the Dollar", and commenting that the Chinese currency is very low which makes it tougher to compete, Trump said that it’s a "beautiful thing to have a strong dollar."

Oh, and for good measure, Trump slammed democrats, calling them "clowns."