Essentially yes (and not just PGP), strong cryptography fell under arms regulations and required, essentially, the equivalent of a firearms license (but was, by contrast, almost impossible to obtain). Import and export of cryptography technology are still regulated, though [1].
> Do they expect people to trust them?
I’m not sure what you mean by that: This isn’t a trust issue, the French government is/was completely upfront about these restrictions.
[1] https://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFT...
Though I agree it's not as bad as if they had been caught lying on the topic. Still, are they specifically saying the tool will protect people from the government itself?
Same goes for Libsodium by the way, I doubt Franck Denis bothered to ask permission as well.