Trump Moves to Punish Countries That Tax U.S. Tech Companies
Reuters reports that former U.S. President Donald Trump has signed an order to impose tariffs on countries that tax American tech companies like Google, Facebook, Apple, and Amazon. According to Reuters, Trump wants to fight against what he sees as unfair digital service taxes (DSTs) that foreign governments charge U.S. businesses.
A White House official told Reuters that Trump is directing his team to take strong action, including tariffs, to stop other countries from making money off U.S. companies. Trump believes only the U.S. should have the right to tax its own businesses, as Reuters highlights.
Reuters explains that Trump’s order revives past investigations into digital taxes, which began during his first term, and could lead to more trade fights with countries that have these taxes.
Trump has already threatened to impose tariffs on Canada and France, which collect over $500 million per year from U.S. tech companies. Reuters notes that the U.S. government claims these taxes unfairly target American businesses, costing them over $2 billion annually.
According to Reuters, digital service taxes have been a long-standing problem in trade relations, with countries like Britain, France, Italy, Spain, Turkey, India, Austria, and Canada all enforcing such taxes. During Trump’s first term, U.S. trade officials concluded that these taxes discriminated against U.S. companies and prepared retaliatory tariffs.
Reuters points out that during President Joe Biden’s administration, trade officials had planned to impose 25% tariffs on billions of dollars’ worth of imports from several countries, but Biden later suspended these tariffs to allow for global tax negotiations.
These negotiations resulted in a plan for a 15% global corporate tax, but the U.S. Congress never approved it, and further talks on replacing digital taxes have mostly stalled.
When Trump returned to office, he immediately withdrew the U.S. from the global tax deal, declaring that the international tax system has “no force or effect” in America, as Reuters reports. He also instructed the U.S. Treasury to explore ways to protect American businesses from foreign taxes.
Reuters explains that Trump’s new order could bring back U.S. trade penalties on countries that impose digital taxes. If activated, these tariffs could hit various imported goods, including clothing, footwear, handbags, cosmetics, and optical lenses.
For example, Reuters notes that in 2021, U.S. trade officials had planned tariffs on $887 million worth of British goods, $386 million worth of Italian products, and hundreds of millions of dollars’ worth of items from Spain, Turkey, India, and Austria.
Overall, Reuters makes it clear that Trump is taking an aggressive stance to protect American tech companies from foreign taxes, which he sees as unfair.
If he follows through with these tariffs, it could lead to more trade disputes between the U.S. and its allies.
Credit : Reuters