President Trump threatened to scrap a just-concluded trade deal with the European Union on Friday, saying any country that levies a tax on digital services will immediately be hit with a 100 percent tariff on all exports to the United States.
Mr. Trump seized on the fact that several European countries are debating imposing such taxes. These taxes will apply to the revenues that large American technology companies earn in Europe. If they choose to proceed, the US would “immediately” impose a 100 percent tariff on them, he said.
“This TARIFF will supersede trade agreements entered into with the country, whether implemented, signed or not,” he wrote.
Earlier in June, Mr Trump threatened to slap a 100 per cent tariff on French wines over the country’s digital taxes, but has not done so.
It is unclear how quickly the president could impose such taxes. The Supreme Court in February struck down the tariffs, which Mr. Trump had issued last year using an emergency law that allowed him to impose tariffs on any country by issuing an executive order.
Other legal options that would allow the president to issue tariffs typically take longer to enact. But the U.S. has previously investigated digital service taxes in France, Austria, Spain and Italy using a legislative provision known as Section 301, which could allow the administration to issue tariffs on a shorter timeline.
The president’s posts threatened to undermine the terms of a trade deal that has taken months to hammer out.
The European Union just this week finalized a comprehensive trade deal it struck with the United States last year at President Trump’s golf course in Turnberry, Scotland.
Widely referred to as the “Turnberry Agreement”, the agreement had been repeatedly delayed. Negotiations stalled earlier this year when Mr Trump threatened to take over Greenland, a semi-autonomous territory of Denmark, for example.
Europeans have widely viewed that trade deal as a bad one, for their part – it locks in higher tariffs on many European products while reducing them to zero on manufactured goods coming from America.
But European officials had pushed ahead with the deal to ensure security for their companies. Under the agreement, many EU goods sent to the US are subject to tariffs of around 15 percent.
The Trump administration has aggressively opposed foreign digital services taxes, which governments levy on the revenue of tech companies like Facebook and Google. France, Italy, Spain and Austria, among others, have introduced domestic digital service taxes, and the bloc has previously considered an EU-wide digital tax. Other nations, such as Belgium, have considered one.
In Europe, policymakers have long been frustrated that they collect little tax revenue from technology companies that have become ubiquitous. The companies are typically taxed on profits, which have historically been directed to low-tax centers such as Ireland or Luxembourg.
Last week, the Trump administration also launched a trade investigation into whether Germany is underpaying for pharmaceutical products. The administration must hold hearings on the matter in September, but can then choose to introduce tariffs.
The 27 nations of the European Union negotiate trade as a bloc, so policies aimed at one nation or a few member nations are generally responded to by the entire union.
Kush Desai, a White House spokesman, said the president has “made clear his opposition to digital services taxes and other forms of extortion against American technology companies, and he is committed to using the many legal authorities at his disposal to defend American workers and businesses.”
The European Commission, the European Union’s executive arm and lead body on trade matters, did not immediately respond to a request for comment.
Adam Satariano contributed with reporting.
