The US imposed 25% tariffs on nearly $2 billion (approximately Rs. 14,625.51 crores) in imports from six nations on Wednesday over their digital services taxes, but the levies were immediately halted to enable time for international tax negotiations to continue.
After a “Section 301” inquiry established that their digital taxes discriminated against US business, the US Trade Representative’s (USTR) office claimed it had approved the threatened tariffs on imports from the UK, Italy, Spain, Turkey, India, and Austria.
If international tax negotiations fail to produce an agreement that prevents countries from imposing unilateral digital services taxes, the United States Trade Representative (USTR) produced a list of goods from the six nations that would face duties.
The US Trade Representative said it would apply 25% tariffs on about $887 million (approximately Rs. 6,480 crores) in British goods, such as apparel, overcoats, footwear, and cosmetics, and $386 million (approximately Rs. 2,820 crores) in Italian goods, such as apparel, handbags, and optical lenses. The United States Trade Representative (USTR) announced tariffs on Spanish goods worth $323 million (roughly Rs. 2,360 crores), Turkish goods worth $310 million (roughly Rs. 2,260 crores), Indian goods worth $118 million (roughly Rs. 860 crores), and Austrian goods worth $65 million (roughly Rs. 475 crores).
Based on 2019 import data, the possible duties aim to equal the amount of digital taxes collected from US businesses, according to a USTR official.
The move highlights the United States’ threat of reprisal as G7 finance ministers prepare to meet in London on Friday and Saturday to discuss the status of tax negotiations, particularly the taxation of giant technology companies and the US demand for a worldwide minimum corporate tax.
Tariffs planned by the United States against France over its digital tax were put on hold in January to give time for talks. Katherine Tai, the US Trade Representative, said she was dedicated to “finding a multilateral solution” to digital taxes and other international tax concerns through the OECD and G20 negotiations.
“Today’s steps provide those negotiations more time to develop while keeping the option of implementing tariffs under Section 301 in the future if warranted,” Tai added. Tai had until Wednesday to announce the tariff action or the statutory powers granted by the Trump administration under Section 301 probes would have expired, one year after they were launched.
The UK levy, according to a British government official, is intended to ensure that IT companies pay their fair share of tax and is only temporary. The representative stated, “Our digital services tax is reasonable, proportionate, and non-discriminatory.” “It’s also only temporary, and we’re actively collaborating with foreign partners to find a worldwide solution to this issue. When the DST is implemented, we will remove it.”