The United Kingdom (UK), France, and several other countries continue to face the looming threat of US tariffs due to their online tax plans. US Trade Representative Katherine Tai has recently announced that the threat of tariffs on goods from Austria, Britain, India, Italy, Spain, and Turkey will be upheld as a response to their digital services taxes. France, in particular, is facing more advanced tariff threats.
These digital services taxes imposed by the mentioned countries mainly target the revenue generated within their borders by American internet companies and e-commerce platforms like Facebook, Google, and Amazon.com. Despite President Joe Biden’s commitment to reaching a global agreement on digital services taxes through the Organization for Economic Cooperation and Development (OECD), the Office of the United States Trade Representative (USTR) has decided to proceed with potential tariffs.
To initiate these tariffs, the USTR will take necessary steps such as filing public notices and collecting public comments. These investigations were initially launched during the Trump administration. Meanwhile, the USTR has terminated its “Section 301” tariff investigations against Brazil, the Czech Republic, the European Union, and Indonesia, as these jurisdictions have not implemented or adopted digital services taxes that were previously under consideration. However, if they do impose such taxes in the future, a new tariff investigation may be initiated.
This decision to maintain the tariff threat against these countries serves as one of the first negotiation tactics revealed by Trade Representative Tai since assuming office. She has previously stated that tariffs are a legitimate tool in US trade policy. While the US remains dedicated to reaching an international consensus on global tax matters through the OECD process, Tai emphasized that until this consensus is achieved, all options under the Section 301 process, including implementing tariffs, will be upheld.
The Internet Association, an organization representing major US internet platforms, has praised the decision to maintain the tariff threat against these countries. They consider the US internet industry to be a significant American export that supports millions of jobs. The association sees this move as an important step towards countering discriminatory trade barriers and hopes for a viable solution to be found within the OECD.
Apart from the threat of tariffs on the aforementioned six countries, the United States is also maintaining an advanced tariff threat against $1.3 billion worth of French imports in retaliation for France’s digital tax. Similar to the investigations conducted by the USTR on the taxes implemented by Austria, Britain, India, Italy, Spain, and Turkey, it was determined that the French tax unfairly discriminates against US technology companies and goes against international tax norms.
Useful Links:
1. OECD Brochure on BEPS
2. USTR Section 301 Investigations
