Trade tension: France worries about an 'unaffordable' predicament for its primary goods sent to the United States
Title: France Faces Alarm over Potential Impact of 50% Tariffs on Exports to US
The junior minister for foreign trade in France, Laurent Saint-Martin, has expressed concern over the potential long-term consequences of a 50% tariff on exports to the US, particularly in sectors like wine, spirits, cosmetics, and aeronautics. The US President, Donald Trump, has threatened to impose such tariffs due to a lack of progress in trade negotiations with the European Union (EU).
In an interview with La Tribune Dimanche, published on Saturday, May 24, Saint-Martin stated, "For certain of our sectors, such as wines and spirits, cosmetics, aeronautics, and all those successful in exports, this would lead to an absolutely intolerable situation in the long term." He added, "This is not a desirable outcome."
French exports to the US in 2024 were primarily driven by aeronautics (€9.1 billion), beverages (€4.1 billion), and pharmaceutical products (€3.8 billion), according to figures from the French Ministry of Economy. If implemented, the tariffs could significantly increase costs for importers and retailers, causing reduced sales and a decline in exports for these sectors.
According to industry analysts, consumers might seek more affordable alternatives, shifting demand towards domestic wines or wines from regions not subject to tariffs. Higher prices could also make French wines less competitive in the US market, potentially benefiting domestic producers.
In the cosmetics sector, while not as directly impacted as wine, tariffs could lead to increased costs for US consumers, potentially affecting demand and market share. Companies might need to absorb higher costs or reduce exports as a result. In response, the cosmetics industry could explore alternative markets or adjust pricing strategies to maintain competitiveness.
Aeronautics is a significant sector for French exports, but it is less directly affected by tariffs compared to consumer goods. However, tariffs could still increase costs for US buyers, potentially affecting demand for French aircraft components or services. Companies might need to renegotiate contracts or explore alternative supply chains to mitigate tariff impacts.
In a diplomatic move, the EU is working to secure a trade agreement with the US based on "respect" rather than "threats," according to European Commissioner for Trade Maros Sefcovic, who is leading the negotiations for the EU. If the US imposes the tariffs, the EU might respond with tariffs on US goods, engage in diplomatic negotiations, or encourage European exporters to diversify their markets to mitigate the effects of tariffs.
In recent months, the EU has been hit by three rounds of US tariffs: 25% on steel and aluminum, announced in mid-March, 25% on automobiles, and 20% on all other European products in April. The latter tariff has been suspended until July to allow for negotiations. However, 10% tariffs remain in place on most goods exported to the US by the 27 EU members.
Saint-Martin stated that "everything is on the table" in terms of the EU's potential response to Donald Trump, with nuances depending on the vulnerabilities, sensitivities, and relationships to the sectors of each EU member state.
- The potential 50% tariffs on exports to the US, if implemented, could have a significant impact on various business sectors in France, such as finance, politics, and general news, due to increased costs for importers and retailers, reduced sales, and declining exports.
- In the cosmetics and wine industries, which are heavily dependent on exports, the tariffs could lead to a shift in consumer demand towards domestic products or regions not subject to tariffs, affecting market share and competitiveness.
- Aeronautics, another crucial export sector for France, could also be affected by tariffs, potentially increasing costs for US buyers and impacting demand for French aircraft components or services, requiring companies to renegotiate contracts or explore alternative supply chains.
