The European Union’s response to US tariffs could include regulating the use of data by American big tech groups, France’s finance minister said in an interview with the JDD newspaper.

“We have several tools at our disposal at the European level: regulatory, fiscal, customs,” Eric Lombard said in the interview published late Saturday. “For example, we can strengthen certain environmental requirements or regulate the use of data by certain digital players,” he added.

President Donald Trump announced on April 2 broad tariffs on imports into the US, including 20% duties on EU goods, as part of his efforts to shake up the global trading system. The bloc — the US’s largest trading partner — has vowed to retaliate with countermeasures if needed, including with its own tariffs, taxing services and targeting American tech firms. 

Lombard said EU rules also allow for taxes on certain American activities, with all the options remaining open and under discussion. He didn’t detail how data usage by big tech groups could be strengthened. Data collection and processing is already regulated by EU rules like the far-reaching GDPR.

Read More: France Eyes US Big Tech in EU Retaliation to Trump’s Tariffs 

The European response to US tariffs should “inevitably” have “consequences” for both the continent’s and US companies, Lombard said. “It is not a question of taxing all American imports, that would be counterproductive, penalizing our economy as much as theirs,” he told the newspaper. “So we are going to target certain industrial segments, in a precise manner.”

Lombard stressed that he still sees a possibility for tariffs to be lifted through negotiations. “If we reach a balanced agreement within a reasonable time frame, it will be a confidence factor” for French companies and households, he said.

This story was originally featured on Fortune.com

Source link

Elon Musk hopes for a “zero-tariff” system between the US and Europe that would effectively create “a free-trade zone,” he said on Saturday, days after levies set by US President Donald Trump sent global markets into a tailspin.

“Both Europe and the United States should move, ideally, in my view, to a zero-tariff situation, effectively creating a free-trade zone between Europe and North America,” Musk told Italian Deputy Prime Minister Matteo Salvini.

The remarks to a gathering of the right-wing League party in Florence stand in contrast to the imposition of global tariffs by Trump. Musk has been a key adviser since January and, before that, was a major campaign donor. 

The president has repeatedly accused the European Union of being unfair and said the bloc was created to “screw” the US. His vice president, JD Vance, has lectured Europeans for “running in fear from their own voters” and said Europe’s values are diverging from those of the US.

Trump on Wednesday announced a 20% tariff on goods entering the US from the European Union as part of a slate of trade levies on almost every country. The bloc has said it would prefer to negotiate a settlement but is prepared to retaliate with countermeasures if needed, including with its own tariffs, taxing services and targeting American tech firms.

Earlier Saturday, Musk appeared to take a swipe at Peter Navarro, a senior White House official who has long pushed a maximalist approach on tariffs. In a series of replies to a post on X, Musk suggested that Navarro’s Harvard degree is “a bad thing” and that Navarro — a former economic professor who served in Trump’s first term — has never built anything.

Musk, a frequent presence in the Oval Office, is serving in a temporary role in Trump’s administration and hasn’t been directly involved in trade policy. Trump said this week that Musk is likely to depart the White House in a “few months.” 

His Tesla Inc., which makes many of its electric vehicles in California and Texas, is less exposed than other carmakers to Trump’s auto tariffs, which took effect this week. But Musk has said that Tesla, which has a big presence in China, would also feel some pain.

In his remarks in Florence, Musk added he also hoped for a deeper partnership between the US and Europe and greater mobility for those wishing to work in either the US or Europe.

“That’s certainly been my advice to the president,” he told attendees via video link, without elaborating on whether the advice concerned tariffs, freedom of movement, or both. 

Read more: Costs of Courting Trump Are Piling Up for Italy’s Giorgia Meloni 

Salvini has launched a charm offensive on Musk in recent weeks, just as signs emerged that the billionaire’s relationship with Prime Minister Giorgia Meloni had begun to cool.

Bloomberg reported in March that Italy has gotten cold feet over a planned €1.5 billion ($1.64 billion) deal for SpaceX’s Starlink system amid significant shifts in geopolitics.

Musk is expected to step back from his role leading the cost-cutting Department of Government Efficiency once his 130-day period as a temporary adviser to Trump has lapsed, while remaining close to the president.

This story was originally featured on Fortune.com

Source link

• President Donald Trump’s much higher-than-anticipated tariffs have crushed stocks but could raise a substantial amount of revenue, while shrinking the economy in the process. The import taxes could generate $700 billion a year in revenue. That could help clear the way in Congress for bigger income tax cuts, though the tariffs would also be the equivalent of a massive tax hike on consumers.

Wall Street suffered a massive case of sticker shock when President Donald Trump unveiled his latest round of tariffs on “Liberation Day,” wiping out $6 trillion in market cap.

But the flip side of the much higher-than-anticipated duties is a potential revenue windfall that could help clear the way for getting bigger tax cuts passed in Congress.

Lawmakers have already taken a key step toward that end. Early Saturday morning, Senate Republicans approved a framework to extend Trump’s tax cuts from his first term, add new cuts like ending taxes on Social Security income, and slash spending.

Some fiscal conservatives in the GOP have balked at the massive deficits and debt more tax cuts could bring. But economists at Citi Research said in a note on Thursday that the aggressive tariffs “may now become a justification for larger tax cuts.”

It’s unclear if tariffs will remain as high as announced (Chinese imports face a 54% levy) or for how long, as Trump has suggested he is open to negotiating rates lower while his authority for imposing them could also face legal challenges.

But for now, they could provide political cover for lawmakers to push through tax cuts on Capitol Hill.

“So long as tariffs remain in place, the administration can also point to the around $700bln in annualized revenue they would raise assuming unchanged trade deficits,” Citi said. “Treasury Secretary Bessent suggested yesterday that that could be used to offset new individual tax cuts. That might be an argument used to win over fiscal conservatives and is also consistent with prior administration statements that the tariff revenue will be redistributed to the American people.”

Tax cuts could help ease the impact that tariffs will have on the economy, which is increasingly seen slipping into recession.

On Friday, JPMorgan analysts said they expect GDP to shrink by 0.3% this year, reversing a prior view for an expansion of 1.3%. The unemployment rate is also seen climbing to 5.3% from the current level of 4.2%.

A separate analysis from the Tax Foundation also estimated the costs and benefits of Trump’s tariffs.

It found that when the new duties are added to the already-announced ones, the tariffs will reduce GDP by 0.7% and raise nearly $2.9 trillion in revenue over the next decade. Foreign retaliation will shrink GDP by another 0.1%.

The tariffs will also reduce after-tax income by an average of 1.9% and equate to an average tax increase of more than $1,900 per US household in 2025, according to the Tax Foundation.

Meanwhile, estimates vary on the effective tariff rate. The Tax Foundation put it at 16.5% and said tariffs will increase federal tax revenues by $258.4 billion in 2025, or 0.85% of GDP, representing the largest tax hike since 1982.

But Fitch Ratings estimated that the overall effective tariff rate will be about 25%—the highest since 1909—up from its prior estimate of an 18% rate and more than 10 times last year’s rate of 2.3%. Citi said it’s above 25%.

In a note on Thursday, JPMorgan chief economist Bruce Kasman called the tariffs the biggest tax increase since the Revenue Act of 1968, which preceded the 1969-70 recession, and sounded doubtful that they could be sufficiently offset by income tax cuts.

“The effect of this tax hike is likely to be magnified—through retaliation, a slide in US business sentiment, and supply chain disruptions,” he wrote. “The shock is likely to be only modestly dampened by the flexibility tariff hikes afford for further fiscal policy easing.”

This story was originally featured on Fortune.com