WASHINGTON: One day after the European Union misses the July 4 deadline set by the US President regarding tariffs, the latter warns about the intention to nullify previous trade deals and impose the highest possible tariffs on any country applying a digital services tax on US firms.
The international trade fight that Donald Trump picked got more serious on Friday when he threatened to impose a tariff of 100% on all goods imported into America from any nation taxing digital services provided by companies of America. This came a day after the deadline set for 4th July, when countries of the EU hurriedly tried to fulfill Trump’s demands regarding international trade.
The implications of Trump’s 100% tariff digital services tax threat
Trump said the 100% tariff would override all trade agreements made with the United States – “whether implemented, signed, or not.” This all-encompassing declaration places at risk the EU-US deal agreed upon last year. According to the deal, the United States has pledged not to charge more than 15% tariff on its imports from Europe provided the latter reduces tariffs on US industrial products to zero percent.
This was not an easy thing for the EU to do in the process of implementing the agreement before the July 4 deadline set by Trump. The very next day after the deadline passed, Trump made a threat which makes the whole deal conditional on Europeans’ abandoning their digital taxes.
France — most vulnerable to Trump’s threats
France is the country which will feel the brunt of Trump’s digital service tax tariff threats the most. Since 2019, France has imposed a 3% tax on revenue generated through digital service activities like online platforms and advertising for companies earning more than €25 million in annual turnover in France and €750 million in global turnover. French legislation seeks to double this tax to 6%. French President Emmanuel Macron has defiantly said he will not succumb to Trump’s demands to abandon this tax at the recent G7 summit.
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Why Washington describes digital taxes as discriminatory
For many years now, the US Trade Representative’s office has described Europe’s digital services taxes as discriminatory towards US companies since US companies like Google, Meta, Amazon, and Apple are dominant in the global market of digital services and, thus, will pay more taxes than any other company based on revenues.
To the government of Washington, a digital services tax is not about being fair; rather, it is about taking money out of American businesses through domestic taxation. This is what makes up the Trump 100% tariff digital services tax.
Threatened by Trump
The timing makes Trump’s tariff threat on digital services the most effective move possible. The EU lawmakers were forced to rush with legislation cutting tariffs on US industrial products before the July 4 deadline, which was set as a result of threats made by Trump to impose the 25% tariff on European goods such as cars, due to their failure to agree to the demands previously put forward.
The very next day, the compliance with the deadline gave no immunity from the 100% tariff threat on digital services. Countries which agreed with Trump’s trade terms found themselves vulnerable without giving up taxation of American digital corporations.
Nayab Fatima is a university graduate and an emerging media professional with a strong passion for journalism, research, and independent reporting. She specializes in developing well-researched, fact-based, and analytical news stories covering a wide range of sectors, with particular expertise in technology, telecommunications, aviation, and the automobile industry.
