New tariffs threatened over tax on big tech

Under that structure, some of Silicon Valley’s titans like Google, Facebook, Apple, and Amazon would be hit with the tax, drawing claims from the Trump administration that U.S. companies are being discriminated against.

On Wednesday, U.S. Trade Representative Robert Lighthizer announced the United States is “very concerned” the so-called digital services tax “unfairly targets American companies.” His office launched an investigation into the effects of the measure under Section 301 of the Trade Act, which Trump has used to hit China with tariffs amid escalating trade tensions.

France so far seems undeterred in its effort to impose the tax on digital services, and the country is joined by the United Kingdom, which unveiled draft legislation Thursday to apply a similar levy.

The plan from the United Kingdom, first announced in October with an implementation date of April 2020, would slap a 2% tax on digital services from companies with annual global revenue exceeding $627 million or €500 million.

“This targeted and proportionate Digital Services Tax is designed to keep our tax system in this area both fair and competitive, pending a longer term international settlement,” Treasury Minister Jesse Norman said in a statement.

The efforts come as the European Union and the United States are seeking better regulation of internet companies that have come under fire for their collection of user data and handling of private information. Companies, particularly the likes of Facebook, Twitter, and YouTube, have also been working to better identify and remove harmful content, though those efforts have been aided by artificial intelligence tools.

While France is forging ahead with the tax, the Trump administration said it intends to continue efforts with members of the Organization for Economic Cooperation and Development “to reach a multilateral agreement to address the challenges to the international tax system posed by an increasingly digitized global economy.”

If the president were to impose duties on Paris as punishment for the tax on digital companies, France would join a growing list of foreign nations threatened with tariffs. Trump has already hiked levies up to 25% on $200 billion in Chinese goods but backed off his threat to hit the remaining $300 billion in Chinese imports with sanctions after meeting with President Xi Jinping at the G-20 last month.

Trump also sent the U.S. auto industry, already struggling, into a frenzy last month when he said his administration would be slapping punitive levies of 5% on all goods imported from Mexico because of the country’s handling of illegal immigration. The president abandoned the proposed duties, however, after Mexico agreed to a series of measures designed to stem the flow of migrants crossing the southern border.

Trump has not been shy about his affinity for using duties as leverage over other countries. As recently as Friday morning, the president reiterated his desire to impose tariffs on products shipped to the U.S., calling them a “great negotiating tool” and “great revenue producer.”