The US threatens to impose tariffs on some of its exports in tax matters for technology companies

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US threatens to impose tariffs of up to 25 percent on UK exports of clothing, makeup and video game consoles in row over new ‘unreasonable’ and ‘discriminatory’ tax on UK tech companies

  • The US is threatening to impose tariffs on some UK exports due to the tax conflicts of technology companies
  • Washington is angry with the UK for imposing a new digital services tax on technology companies
  • It has compiled a list of UK products it could hit in retaliation with additional tariffs

The US is threatening to impose tariffs of up to 25 percent on some UK exports as it retaliates against Britain’s new ‘unreasonable’ and ‘discriminatory’ tax on major tech companies.

The UK introduced a digital services tax last April to ensure that search engines, social media platforms and online marketplaces pay their fair share.

But Washington believes the tax is unfairly targeting US companies and is now pursuing countermeasures as it puts pressure on No. 10 to change course.

The increased rates for exports to the UK could be imposed on items such as makeup, coats, dresses, shirts, ceramics, gold necklaces, air-conditioning machines, furniture and game consoles.

Joe Biden

Boris Johnson

Boris Johnson

The US is threatening to impose tariffs of up to 25 percent on some British exports as it retaliates against Britain’s new ‘unreasonable’ and ‘discriminatory’ tax on major tech companies.

The UK digital services tax, first unveiled in October 2018 by then-Chancellor Philip Hammond, applies a two percent tax on the revenues of major technology companies.

The tax applies to companies with worldwide digital service revenues in excess of £ 500 million and UK digital services revenues in excess of £ 25 million.

Downing Street has promised that the tax will be abolished once a global solution is found to ensure technology companies pay commensurate amounts of tax where they operate.

The US had urged the UK not to go through with the measure, but number 10 went ahead anyway.

The Office of the US Trade Representative launched an investigation last June to determine whether the policy discriminated against US companies and whether the tax was “unreasonable.”

In January of this year, it was concluded that the tax on digital services is “unreasonable or discriminatory and taxes or restricts US trade, and is therefore open to action.”

The US has vowed to take “all appropriate and feasible steps,” with the US Trade Act permitting the imposition of retaliatory rights.

The U.S. Trade Representative’s office identified a possible course of action, saying it “proposes to impose additional tariffs of up to 25 percent ad valorem for an aggregated level of trade.”

According to the US, US companies will pay the UK about $ 325 million a year through the digital services tax, and the tariff measures are designed to generate a similar amount.

The US has put together a long list of products that could be affected by the increased tariffs. The first investigation into the tax was launched under Donald Trump’s White House and the Joe Biden administration has decided to go ahead with it.

The proposed way forward will now be discussed in the US.

A UK government spokesperson told the BBC: ‘Like many countries around the world, we want to make sure technology companies pay a fair share of the tax. Our digital services tax (DST) is fair, proportionate and non-discriminatory.

It’s also temporary. We are working positively with the US and other international partners to find a global solution to this problem and will remove the DST when in effect. ‘

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