The Atlanta Journal-Constitution
U.S. pulls out of global digital tax talks, warns of tariffs
European countries have been looking to tax online commerce.
WASHINGTON — The Trump administration has suspended fraught international tax negotiations with European countries and warned that it will retaliate if they move forward with plans to impose new taxes on American technology companies like Amazon, Facebook and Google.
The decision, conveyed in a letter from Treasury Secretary Steven Mnuchin to European finance ministers last week, comes as global talks have stalled over how to tax commerce that takes place online, particularly in countries where companies sell goods and services but have no physical presence.
The collapse of negotiations could set off an escalating trade war and saddle multinational corporations with vast new uncertainty over their future tax bills, at a time when the coronavirus has upended supply chains and business models worldwide.
As the United States and countries in Europe work to contain the pandemic and prop up their economies, a growing number of countries — plus the European Union — have imposed or proposed taxes on digital activity that would largely apply to U.S. corporations.
The United States has threatened retaliatory tariffs in response and has developed plans to tax French wine, handbags and cookware. President Donald Trump has also threatened to impose tariffs on European imports in response to the taxes.
Industry groups have largely cheered the administration’s stance, but they have also encouraged Trump to remain engaged in multilateral talks through the Organization for Economic Cooperation and Development.
On Wednesday, Robert E. Lighthizer, the U.S. trade representative, confirmed that the country was withdrawing from the discussions during a House Ways and Means Committee hearing.
“The secretary made the decision that rather than have them go off on their own he would just say we’re no longer involved in the negotiations,” Lighthizer said, referring to Mnuchin.