Customs duties: France appeals to the patriotism of businesses

Eric Lombard's comments on BFMTV/RMC come the day after President Emmanuel Macron called for a suspension of overseas investment, as part of a European response he hopes will be "proportionate" in order to give negotiations with the Americans a chance.

"We are appealing to patriotism," said Mr. Lombard. "It is clear that if a large French company agreed to open a factory in the United States, it would give the Americans a point in the discussions."

US President Donald Trump signed an executive order on Wednesday imposing tariffs of at least 10% on all imports into the United States and 20% on those from the European Union, sending financial markets into a tailspin and prompting Chinese retaliation.

Jobs at risk

French companies are well established in the United States, where France was the third-largest European investor and the fifth-largest foreign investor in 2023.

"The first concern, (...) the one that should alert us, is for French producers, for companies that produce and export to the United States," declared Prime Minister François Bayrou, warning that "tens of thousands of jobs (were) threatened" in the agricultural, wine-growing and spirits sectors.

For Eric Lombard, the European response must be "proportionate" and "bring us to the negotiating table," which is done "as equals," the European economy being one of "the most powerful in the world" with an internal market of 450 million consumers.

"We have every means to negotiate (...) to achieve disarmament (of the announced measures, Editor's note) as quickly as possible. Dialogue is ongoing," he added.

He warned that a response could go "beyond customs duties," citing standards, data exchange or tax tools, so as not to "disrupt the value scale in Europe."

"The response can be very vigorous and we must not respond with exactly the same weapons because if we do as the United States (...), we will also have a negative effect in Europe," with inflation and a drop in growth, he stressed.

As the 2026 budget is being prepared in a context of severe constraints on public finances, the government also fears a further slowdown in growth, already penalized by significant international uncertainty.

In the event of a negotiated agreement, "we could still have a year (...) of growth, albeit moderate but positive," Eric Lombard estimated. In the event of an escalation of the trade war, "we will be (...) in a different, much more difficult situation."

Deficit under pressure?

The Banque de France has already lowered its growth forecast for 0,2 by 0,7 percentage points to 2025%, and the government could soon follow suit, possibly on April 15 at a conference on public finances.

A deterioration in the economy would also risk France missing its target of reducing the public deficit to 5,4% of gross domestic product in 2025, compared to 5,8% in 2024, the minister suggested.

And he ruled out a "further cut (in) public spending" after a budgetary effort of around fifty billion euros this year.

The deficit reduction target is, however, maintained, his ministry later clarified.

To protect exporting companies from the "real risk" of economic disruption, Eric Lombard promised them "support" from the ministry, including regular exchanges, such as the meeting on Thursday at the Élysée Palace with the most exposed sectors, such as aeronautics, viticulture and cosmetics.

The public investment bank Bpifrance is mobilized. "But I also ask all banking networks to be very attentive in monitoring these companies, at a time when our economy may be fragile," he explained.

The BPCE banking group and its Banque Populaire, Caisse d'Epargne and Natixis networks have said they are "particularly attentive to supporting" their corporate clients.

Illustrative image of the article via Depositphotos.com.