The US has announced several changes on their tariffs policies. Firstly, The United States Trade Representative (USTR) announced, then immediately suspended, tariffs on certain products from six countries while it further analyses their Digital Tax regimes (Spain, Austria, India, Italy, Turkey and the UK). This suspension will be active for 180 days, pending a final resolution.
In addition, on 15 June the EU and the US announced an agreement to end the suspension of cross-tariffs on European and US exports. These tariffs had been in place for seventeen years, in what has been described as the longest trade war in history, and began after the conflict between Airbus and Boeing over subsidies received by these companies.
The agreement announced by the US and the EU is aligned with other recent measures from Joe Biden’s administration, such as his tax reforms, or the recent announcement by the G7 of the intention to establish a global minimum tax. Institutional reactions have not been long in coming, and official statements point to a ‘return to multilateralism’.
The USTR launched investigations into digital services taxes in June 2020 – looking further at taxes that it had previously approved or was considering for ten different countries.
As a result of its investigations, in January 2021 the USTR concluded that the taxes on digital services adopted by six of those ten countries discriminated against American digital companies and did not respect the principles of international taxation, therefore placing a burden on U.S. companies and undermining the U.S. economy. (The six countries being Spain, Austria, India, Italy, Turkey and the UK.)
Accordingly, on June 2, the USTR communicated the outcome of these investigations into Digital Services Taxes. The final decision of the USTR is to impose additional tariffs of up to 25% on certain goods from these countries. At the same time, however, a decision was made to suspend the tariffs for up to 180 days – the aim being to allow time for the Organisation for Economic Co-operation and Development (OECD) and the G20 to conclude their multilateral negotiations on international taxation. Tariffs will be in place from 29 November 2021.
In the meantime, the USTR will continue to monitor the results of trade actions, progress in OECD and G20 negotiations, and also hold discussions with the six countries involved. Depending on these developments, the USTR may modify its decision.
Local Knowledge – International Coverage
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