Tech Tax Vs Trump Tax
Trump and his aids pulled an all-nighter on Friday, burning the midnight oil to brainstorm as many French products they could impose tariffs on as impossible. Tech firms accused of dodging tax around Europe are getting a taste of their own medicine with the French levying a “digital tax” against them. Now, the White House wants its own back!
Tech companies are a hot potato in both the stock market and the political scene. Politicians have been up in arms recently over how Silicon Valley uses tax detours to chart a cheeky path of least cost resistance. Not on France’s watch! As the first mover on this issue, the National Assembly has imposed a tit for tat tax of 3% on these firms.
Investors fear this “digital tax” isn’t an exclusive French delicacy. Parliament in the UK has been signing off on very similar proposals, as has Italy, as has Spain! We could soon go on a world tour of digital taxes.
Before things get too out of hand, President Trump wants to deploy those trusty tariffs. He’s waiting on an American investigation into what France has done, and he stands ready to set a worldwide precedent by making wine, cheese, and baguettes, a whole lot more expensive. If countries don’t retreat, it could get very ugly for stock markets home and abroad.
Investors aren’t game for more tariff wars, at least not unless they tease an interest rate cut from the Fed. In a touch of irony, these are exactly the trade disputes that have resulted in the global growth slowdowns. It’s these slowdowns that make Silicon Valley such a scarce hotbed for growth, and in need of protection by Washington if the economy is to be ripe come election day. Alternatively, tech companies could play fairer themselves, and then we wouldn’t be in this mess? This story isn’t over.