US trade chief readies tariffs against six countries over digital taxes

Washington: US Trade Representative Katherine Tai said on Friday that she will not back away from threatening tariffs, announcing she is readying potential duties against Austria, Britain, India, Italy, Spain and Turkey in retaliation for their digital services taxes.

In a statement, Tai announced that her office would proceed with public notices and collect public comments, meaning that it will keep the threat of tariffs on imports from the six countries as part of an investigation begun by her Trump administration predecessor, Robert Lighthizer.

The Office of the United States Trade Representative (USTR) announced the decision despite the Biden administration’s renewed commitments to pursue a global agreement on digital services taxes.

Tai also said that the USTR was terminating “Section 301” tariff investigations against Brazil, the Czech Republic, the European Union and Indonesia because these jurisdictions have not adopted or implemented digital services taxes that were previously under consideration. If they do adopt a digital services tax, USTR said it may open a new tariff probe.

The move is among the first negotiating tactics revealed by Tai since she took office last week.

“The United States remains committed to reaching an international consensus through the OECD process on international tax issues,” Tai said in a statement. “However, until such a consensus is reached, we will maintain our options under the Section 301 process, including, if necessary, the imposition of tariffs.” The United States also is maintaining a more advanced tariff threat against $1.3 billion in imports of French Champagne, cosmetics, handbags and other goods in retaliation for France’s digital tax.

Like the French tax, the USTR investigations into the taxes adopted by Austria, Britain, India, Italy, Spain and Turkey found that they discriminate against US technology companies and are inconsistent with international tax norms.

The taxes target in-country revenues of digital services platforms such as Facebook, Google, and Amazon.com.