French businesses, particularly small and medium-sized enterprises (SMEs), are bracing for impact after President Emmanuel Macron issued a bold call to suspend investments in the United States.
The move comes in response to Donald Trump's sweeping new tariffs on European imports—a decision Macron has slammed as "brutal and unfounded."
At a high-stakes meeting with top French business leaders, Macron urged companies to pause all planned investments in the US until the situation becomes clearer.
"For now, we need to hit the brakes," he told the gathering, which included Prime Minister François Bayrou and key ministers. "The path ahead is uncertain, and these tariffs will have a massive impact on Europe's economy."
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Trump's newly imposed 20% tariff on European imports has sent shockwaves through industries on both sides of the Atlantic. Macron went further, predicting that Americans themselves will end up "weaker and poorer" due to the trade restrictions.
Macron is pushing for a collective European response, warning against any country taking unilateral action. The plan is twofold:
Mid-April: The EU will roll out measures targeting existing US tariffs on steel and aluminum.
End of April: A more aggressive response will be launched after assessing the full impact of Trump's new trade barriers.
Patrick Martin, head of the powerful French employers' federation Medef, called the situation "very serious," warning that trade relations are becoming "brutal" and unpredictable. Meanwhile, Alexandre Saubot, president of France Industrie, emphasized that French manufacturers should consider countermeasures, including delaying or canceling US investments.
The financial markets have already reacted, with the Paris stock exchange tumbling over 3% its worst drop in two years. Small and medium-sized businesses, many of whom rely on cross-border trade, could bear the brunt of the fallout.
Vincent Vicard, an economist at the Centre for Prospective Studies and International Information, says the EU still has strong options to retaliate. These include reducing American imports, limiting market access for US firms, and even freezing property rights for American companies in Europe.
With French investments in the US valued at $370 billion in 2023 employing over 741,000 people businesses are now at a crossroads. Will they wait out the storm, or will Trump's latest move force them to rethink their future in the US market? One thing is clear: the battle lines in this trade war have been drawn.
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