President Donald Trump on Friday threatened a 100 per cent tax on imports from any country that imposes a tax on digital services from United States corporations.
In a post on social media, Trump took aim at European countries that he said are discussing “imminent” implementation of taxes on American corporations. The U.S. president has repeatedly sought to make use of tariffs as option to deter such taxes, but many countries are searching for revenues as their economies increasingly operate in digital realms which are dominated by American corporations.
“Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100 per cent TARIFF on any and all Goods sent to the US of America,” Trump wrote.
He added that the brand new tax would supersede any previously negotiated trade deals. Trump said the penalty would apply to any country that moves forward with such a tax, but he singled out European nations in his post.
The move may lead to a bigger showdown that would increase prices and hinder economic growth, possibly setting off a bigger trade war if the 27-member European Union was compelled to retaliate.
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“Unilateral measures targeting such legitimate policies are unjustified. If pursued, the EU will respond swiftly and decisively to defend its rights and regulatory autonomy,” said Olof Gill, a spokesperson for the European Commission on Friday.
He defended taxation on technology corporations as “non-discriminatory” and applied equally to “all large corporations, no matter their origin.”
Trump has repeatedly pushed against foreign efforts to tax or regulate American tech giants. Last yr, he threatened latest tariffs on any country that moved to achieve this. A post from last August said that digital taxes and regulation “are all designed to harm, or discriminate against, American Technology.”
The threat comes ahead of Trump’s July 4 deadline for the European Union and the US to start out implementing a tariff deal that caps tariffs on most EU exports at 15 per cent.
The European Union in May finalized a trade cope with the US that caps most tariffs on EU exports at 15 per cent. The deal followed months of debate throughout the EU after European Commission chief Ursula von der Leyen tentatively struck the deal last yr while visiting Trump’s golf course in Scotland.
Digital taxes weren’t a part of the agreement and have remained a sticking point between the U.S. and the European bloc.
The U.S. government has previously conducted tariff investigations into digital services taxes under Section 301 of the Trade Act of 1974. Nevertheless it was unclear how Trump would perform his threat and whether he would apply the tariffs broadly or initially goal certain nations.
Britain, which is not any longer a part of the EU, has since 2020 levied a two per cent digital services tax on revenues earned by search engines like google and yahoo, social media sites and online marketplaces that “derive value” from U.K. users.
The British government said in a policy document on the time that corporate tax rules for digital businesses had “led to a misalignment between the place where profits are taxed and the place where value is created.”
The U.K. tax includes thresholds, so mainly large international corporations pays it. The tax was designed to “ensure the big multinational businesses in-scope make a good contribution to supporting vital public services,” the document said.
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