On Tuesday, in a move that could lead to new retaliatory tariffs, the U.S. Trade Representative’s office said it was launching a “Section 301” investigation into taxes on digital services adopted or under consideration by a number of U.S. trading partner nations.
“President Trump is concerned that many of our trading partners are adopting tax schemes designed to unfairly target our companies,” U.S. Trade Representative Robert Lighthizer said in a statement. “We are prepared to take all appropriate action to defend our businesses and workers against any such discrimination.”
U.S. President Donald Trump based his nearly two-year trade war with China on a Section 301 investigation into Beijing’s intellectual property and technology transfer practices.
Several European countries are considering such a digital-services tax to raise revenue from the local businesses of companies including Google and Facebook.
Broad negotiations through the OECD to set a global standard for digital taxes have proven elusive, and the coronavirus pandemic has slowed them down.
In a Federal Register notice, the USTR said the probe would cover digital services taxes adopted or under consideration by Austria, Brazil, the Czech Republic, the European Union, India, Indonesia, Italy, Spain, Turkey and Britain.
MacDailyNews Take: Last December, the U.S. vowed 100% tariffs on $2.4 billion in imports from France over such a digital tax that would harm U.S. tech firms including Apple.
As per the EU itself, the smart approach for Apple et al. is to lobby for harmonized EU taxation over a state-by-state patchwork of taxes, as that will at least offer simplicity, stability, and predictability.