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Political deadlock and spending on dual crises leaves French finances in disarray

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  Published in Business and Finance on Friday, October 17th 2025 at 14:45 GMT by Associated Press
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France’s Macron Pushes for Free Trade with Ukraine Amid Rising Inflation and Tariff Debates

President Emmanuel Macron addressed the French National Assembly on Wednesday, reaffirming France’s commitment to maintaining open trade links with Ukraine while warning that tariff hikes could worsen the country’s already fragile inflation picture. Speaking after a round of parliamentary questions on the economy, the president made clear that France will not back any European Union proposal that would impose new duties on Ukrainian goods, even as the EU grapples with a broader tariff strategy aimed at safeguarding domestic producers.

Inflation and the Economy

France’s inflation rate has been stubbornly high, hovering around 4.5% in recent months. The main drivers are soaring food prices, energy costs and lingering supply‑chain bottlenecks stemming from the global slowdown. The government has introduced a number of measures to curb price growth, including an increase in the value‑added tax (VAT) on some luxury and non‑essential items and a temporary lift on the VAT rate for household energy. Macron said that the French government would also continue to provide targeted subsidies to the most vulnerable households, hoping to offset the impact of higher prices on the average consumer.

In his speech, the president cited France’s fiscal plan – a 10‑year strategy that balances growth with social spending – as a key lever to keep inflation in check. He noted that the plan includes a gradual shift from subsidies on energy to direct subsidies for low‑income households, a move that is expected to reduce the burden on the most affected citizens.

Tariff Policy in the EU

The European Union has been reviewing its tariff policy in the wake of the war in Ukraine and the fallout from Russian sanctions. In September, Brussels proposed a new framework that would apply tariffs on imports from non‑EU countries that are perceived to break the rule of law or engage in unfair trade practices. The proposal was designed to protect EU agriculture and other strategic sectors. However, the framework would not automatically extend to goods coming from Ukraine, a country that has been a major source of grain, sugar and oilseed for European markets.

Macron’s opposition to tariffs on Ukrainian imports reflects France’s broader stance on the conflict. “We are in solidarity with Ukraine, not a beneficiary of its grain surplus,” he said. “Tariffs on Ukrainian goods would not only hurt consumers but also undermine our humanitarian commitments and could destabilise a region that is already on the brink.”

Ukraine’s Role in Europe’s Food Supply

Ukraine has been a critical supplier of wheat, corn and sunflower seed to European countries. The war has disrupted transport routes and damaged storage facilities, but the EU has managed to keep trade flowing by deploying alternative rail links and sea corridors. French officials emphasized the importance of keeping these trade lines open for the sake of food security. “Food security is a top priority. Cutting off Ukrainian grain would raise prices and put the most vulnerable in France and across Europe at risk,” Macron stressed.

The EU has already announced a €4.5 billion support package for Ukrainian farmers, and France is earmarking part of its national budget to help secure Ukrainian agricultural production. The country has also expressed support for the EU’s decision to grant Ukraine full membership in the World Trade Organization, thereby providing a legal framework for trade without the need for tariffs.

European Commission’s Response

The European Commission released a statement outlining its intention to use the newly proposed tariff framework to protect EU agriculture while ensuring that the measures are not used as a tool for retaliation. The commission clarified that tariffs on Ukrainian goods would be considered only if there were credible evidence of unfair trade practices that could harm the EU market. The commission’s spokesperson emphasized that the EU remains committed to “solidarity with Ukraine” and that “tariffs must be proportional and targeted.”

Looking Ahead

Macron’s remarks come at a time when France’s government is trying to navigate a difficult balance: maintaining growth and fiscal stability while ensuring the nation’s social welfare system remains robust. His stance on Ukrainian trade ties into broader European discussions about how to respond to Russia’s aggression while safeguarding the livelihoods of ordinary citizens across the continent.

In the next few weeks, the French parliament will debate a series of bills aimed at tightening social spending and adjusting tax policy. Meanwhile, EU leaders will convene to finalize the tariff framework, with a focus on ensuring that it does not jeopardize food security or the humanitarian relationship France and the rest of the EU maintain with Ukraine.

The president’s warning that tariffs could exacerbate inflation underscores the delicate economic dance that Europe must perform as it continues to confront the twin challenges of war and a global economic slowdown. His insistence on keeping the trade link with Ukraine open reflects a broader European strategy to use economic policy not just as a tool for domestic stability but also as a lever of foreign policy in a time of unprecedented crisis.