Biden, Trump Maintain Stance on 'Digital Tax Retaliatory Tariffs'

[Asia Economy Reporter Yujin Cho] U.S. President Joe Biden has decided to maintain the previous administration's stance of retaliating with high tariffs against countries that have introduced digital taxes targeting big tech companies such as Google and Amazon.

Katherine Tai, U.S. Trade Representative (USTR), stated on the 26th (local time) that she is considering imposing retaliatory tariffs on products from six countries that have introduced digital taxes: Austria, the United Kingdom, India, Italy, Spain, and Turkey.

Representative Tai explained, "The United States will strive to reach an international agreement through the Organization for Economic Cooperation and Development (OECD) process," but added, "Until an agreement is reached, we will maintain our options under Section 301 of the Trade Act, including imposing tariffs."

Section 301 of the Trade Act is a federal law that allows the U.S. to seek retaliatory measures if it determines that unfair acts by another country have restricted U.S. trade.

This announcement came as President Biden expressed his intention to lead an international agreement on digital taxes through the OECD.

The USTR announced last June, during the Trump administration, that it had launched investigations into these countries to protect big tech companies.

The Biden administration, which took office in January this year, reviewed the existing policy but has now decided to continue the investigation and proceed to the next stage.

The USTR stated that it will continue the procedures for imposing tariffs, including gathering public opinion, which began under the Trump administration.

Earlier, France introduced a digital tax in July 2019, targeting mainly U.S. IT companies such as Google, Amazon, Facebook, and Apple, by imposing a certain percentage on their annual revenue earned within the country.

Subsequently, movements to introduce similar systems arose in Eastern European countries such as Austria and the Czech Republic, as well as in Indonesia, Thailand, and Vietnam.

The USTR announced on the same day that Brazil, the Czech Republic, the European Union (EU), and Indonesia, which were on the investigation list, have not yet applied or implemented digital taxes and thus are excluded from retaliation.

However, the USTR emphasized that the threat of heavy tariffs has not disappeared, as investigations could resume if these countries apply digital taxes.