The U.S.-French commercial and economic alliance is one of the United States’ oldest and closest.  The United States and France established diplomatic relations in 1778 and that same year, this newly established country entered into its first trade agreement, the Treaty of Amity and Commerce, with France.  France and the United States traded $153.8 billion of goods and services in 2022- up 32% from 2021- its highest-ever level in value.[1]  In 2022, the United States was the largest foreign investor in France, and France the fifth largest investor in the United States.  Relations between the United States and France continue to be active and friendly, drawing from common values and similar policies on most political, economic, and security issues.

France is the seventh largest economy in the world and third in Europe after the UK and Germany.  The Gross Domestic Product (GDP) in France was $2.78 trillion in 2022, down from $2.95 trillion in 2021, representing 1.24 percent of the global economy.  France’s GDP is expected to maintain its position at approximately $2.8 trillion in 2023 and $2.83 trillion in 2024.[2]

France is a member of the G-20, the G-7, the European Union, and the World Trade Organization. Additionally, France is one of the 38 members of the OECD and hosts its headquarters in Paris.  France has substantial agricultural resources and maintains a strong manufacturing sector.  Business France reported that since 2017, the balance of new factories has been positive with 300 factories opened, leading to the creation of 90,000 industrial jobs throughout the country.[3]   

France has a stable business climate that attracts investors from around the world.  The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms.  The French President is seeking to make France a European leader in green industries with more than $24.8 billion in investments planned by 2030.  This plan aims to achieve two objectives:  to become a leader in “green” technologies and to decarbonize existing industries.  The service sector accounts for an increasingly large share of economic activity and is responsible for most job creation in recent years.

France has an educated population, first-rate universities, and a talented workforce.  It has a modern business culture, sophisticated financial markets, a strong intellectual property rights regime, and innovative entrepreneurs and business leaders.  The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks, a dense network of public transportation, and efficient intermodal connections.  High-speed telecommunication is nearly everywhere with the launching of 5G in 2020, and available in large and many mid-sized metropolitan cities.  Countrywide 5G coverage is expected to be complete by 2030.

Trade and investment ties between the United States and France are strong.  U.S. exports to France include industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, and broadcasting equipment.

France is the United States’ third-largest trading partner within the European Union (EU).  According to the French government,[4] France accounted for almost 11 percent of total U.S. exports and imports of goods and services with the EU in 2022.  According to the U.S. Bureau of Economic Analysis (BEA), in 2022, the total investment by France is $360 billion in the United States (up 6.6% compared to 2021).  This investment represents close to 7 percent of total inward investment in the U.S.  In the same year, the U.S. retains its position as the leading investor in France, with a cumulative FDI position amounting to over $112 billion.

In 2022, the United States was the leading foreign investor in France in terms of projects and jobs: reporting an increase of 13% in projects and 69% in jobs.  In 2022, US investment in France created 280 projects (16% of total new foreign projects) and 17,107 new jobs - 29% of the total new jobs generated by FDI (Fiches pays Etats-Unis 2022: Source Business France).  The Franco-American economic relationship creates more than 1.2 million jobs, nearly two-thirds of which are in the United States across 19 states.[5]

In 2022, the Software and IT services sector lead for French FDI, while, according to the French Treasury Department, the United States was the leading investor in manufacturing, R&D, and engineering.  The main industrial sectors benefiting from R&D and engineering projects include electrical and IT equipment, aeronautical, naval and railway equipment, as well as medical equipment and devices.  Projects related to IT services and business consulting and services captured 20 percent of American investment in France, the second largest share, in term of job creation.[6]

Following the first election of French President Emmanuel Macron in May 2017, the French government implemented significant labor market and tax reforms.  By relaxing the rules on companies to hire and fire employees, the government cut production taxes by 15 percent in 2021, and the corporate tax fell to 25 percent in 2022.  And the trend will continue with the total abolition of the CVAE tax spread over 2023 and 2024[7].  Surveys of U.S. investors in 2021 (latest data) showed the greatest optimism about the business operating environment in France since 2008. Macron’s reform agenda for pensions was derailed in 2018, however, when France’s Yellow Vest protests—a populist, grassroots movement for economic justice—highlighted wealth and, to a lesser extent, income inequality.  Macron’s pension reform ultimately passed via decree, raising the legal retirement age from 62 to 64, and became effective September 2023.

The onset of the Covid-19 pandemic in 2020 shifted Macron’s focus to mitigating France’s most severe economic crisis in the post-war era.  The economy shrank 8.3 percent in 2020 compared to the year prior, but with the help of unprecedented government support for businesses and households, economic growth reached seven percent in 2021.  The government’s centerpiece fiscal package was the €100 billion ($110 billion) France Relance plan, of which over half was dedicated to supporting businesses.  The government launched a follow-on investment package in late 2021 called “France 2030” to bolster competitiveness, increase productivity, and accelerate the ecological transition.

Key Links:

Direct Investment by Country and Industry, 2022

France Market Overview

International Economic Accounts

France GDP – 2023 Data – 2024 Forecast

France is Investing in Green Industries

Political Environment

For background information on the political and economic environment of the country, please click on the link to the U.S. Department of State Countries & Areas Website.