The Biden administration is threatening to slap 25% tariffs on more than US$2 billion of goods (~RM8.2 billion) from six countries, including some of its closest allies, in retaliation for digital taxes imposed on its tech companies.
Washington announced the tariffs but then immediately suspended them, obviously intent on using them as a bargaining chip in ongoing international tax negotiations. According to Reuters, the US Trade Representative (USTR) office has accused the UK, Italy, Spain, Turkey, India, and Austria of discriminating against US firms with their respective digital taxes.
The U.S. goal has always been to find a path to resolving the issues around Digital Services Taxes (DSTs) through the multilateral tax negotiations at the @OECD and the #G20. Read more about the conclusion of our investigation here: https://t.co/cg04DnPVi2
— United States Trade Representative (@USTradeRep) June 2, 2021
If negotiations fail, the US would impose 25% tariffs on roughly US$887 million (~RM3.7 billion) worth of goods from the UK, approximately US$386 million (~RM1.6 billion) from Italy, US$323 million (~RM1.3 billion) from Spain, US$310 million (~RM1.3 billion) from Turkey, US$118 million (~RM486 million) from India, and US$65 million (~RM268 million) from Austria.
A USTR official said the threatened tariffs, based on 2019 import data, are aimed at equalling the amount of digital taxes that would be extracted from US companies.
A host of countries have levelled digital taxes aimed at large US tech companies, complaining that they’ve reaped huge profits while contributing little in terms of taxes. The UK government spokesperson defended the country’s digital tax as “reasonable, proportionate and non-discriminatory.”