US sanctions would cost France 1 billion euros

According to credit insurance company Euler Hermes, France would resist US tariffs imposed on exports of European products.

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French wine in a supermarket in Los Angeles in August. MARK RALSTON / AFP

Trade tensions are worsening and, for the first time, they will directly affect France. In deciding, with the blessing of the World Trade Organization (WTO), to increase tariffs of $ 7.5 billion (€ 6.8 billion) on a list of European products as of October, the US administration is expected to cause nearly 1 billion euros in losses to companies tricolor, said Euler Hermes. "It's less than the 2.4 billion losses that we had planned at first"points out Stéphane Colliac, an economist with the credit insurer.

More than half of this shortfall (530 million euros) will target the aviation industry through sales of "finished aircraft" taxed at 10%. Exports of non-sparkling grape wines, ballasted by 25% of customs duties, would be allocated up to 370 million euros. The rest could be levied on dairy products (60 million euros of losses) and other residual items (40 million).

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Finally, "The majority of aeronautical exports from France to the United States are not affected by the rise in tariff barriers", says Mr. Colliac. Cognac and champagne are also spared. As are the pharmaceutical and chemical products, which represent one of the main French export items. As a result, the Hexagon should not be overly suffering from US sanctions from a macroeconomic point of view.

Nevertheless: the protectionist risk increases and the tricolor economy is exposed. How far? That's the whole question. Less exporting than its large German neighbor or, as a proportion of gross domestic product (GDP), than Italy, France has lost competitiveness in the last twenty years. But the country remains the second largest European economy and succeeds in sectors such as aeronautics, pharmacy and luxury.

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Until then, trade tensions have not jostled him. Paradoxically, France has even far outperformed, thanks to its sectoral specialization and the free trade agreements concluded by the European Union (EU) with South Korea, Canada and Japan. "Over the last eight months, they have allowed a gain of 1.8 billion euros in exports", calculated Stéphane Colliac.


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