Mnuchin warns UK, Italy of tariffs if digital tax plans are implemented

Mnuchin warns UK, Italy of tariffs if digital tax plans are implemented
© Greg Nash

Treasury Secretary Steven MnuchinSteven Terner MnuchinThe Hill's Coronavirus Report: National Portrait Gallery's Kim Sajet says this era rewiring people's relationship with culture, art; Trump's war with Twitter heats up How lawmaker ties helped shape Fed chairman's COVID-19 response Business groups throw support behind House Democrat's bill to provide pandemic risk insurance MORE warned the United Kingdom and Italy that they will face tariffs if they move forward with digital tax plans, The Wall Street Journal reported Tuesday

At an event sponsored by the Journal on the sidelines of the World Economic Forum in Davos, Switzerland, Mnuchin said he hoped the two countries would put their plans on hold.

“If not, they’ll find themselves faced with President TrumpDonald John TrumpTrump marks 'very sad milestone' of 100K coronavirus deaths DOJ: George Floyd death investigation a 'top priority' Lifting our voices — and votes MORE’s tariffs," Mnuchin said, according to the newspaper.

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Several European countries are pursuing taxes on large tech companies such as Amazon, Facebook and Google. France enacted such a tax last year, Italy's Parliament approved a digital tax late last year and the U.K. is set to implement this type of tax this year.

European countries are seeking to raise revenue from businesses that have many users in their nations but pay little taxes there. But U.S. policymakers on both sides of the aisle argue that the digital taxes unfairly target American companies.

The U.S. trade representative in December determined that France's digital tax was discriminatory and proposed tariffs of up to 100 percent on $2.4 billion in French goods as a response.

Trump and French President Emmanuel MacronEmmanuel Jean-Michel MacronHillicon Valley: Twitter fact-checks Trump | House reaches deal surveillance program amendment | Canada to lead anti-cyber attack effort Canada to lead global effort to counter election interference America's post-COVID-19 foreign policy MORE spoke about France's digital tax on Monday, the same day that the Journal reported that the two countries have reached a truce under which France has agreed to postpone its tax until the end of the year, while the U.S. will postpone tariffs. 

Trump confirmed the agreement in an interview with the Journal on Tuesday, saying that "if anybody is going to tax these companies, it’s going to be U.S. that taxes these companies.”

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Macron tweeted on Monday that the U.S. and France "will work together on a good agreement to avoid tariff escalation."

Mnuchin said at the Journal's event on Tuesday that the agreement is “the beginning of a solution.”

The U.S., France and other countries are working on international tax rules through the Organization for Economic Cooperation and Development, though Mnuchin last month raised some concerns about ideas being considered as part of those discussions.

“If reports are accurate, we’re pleased that the United States and France have come to an agreement that would postpone a discriminatory tax on American technology companies until the multilateral process is complete," said Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyFrustration builds in key committee ahead of Graham subpoena vote  Rosenstein to testify as part of Graham's Russia investigation probe Grassley: White House 'failed to address' if there was a 'good reason' for IG firings MORE (R-Iowa) and ranking member Ron WydenRonald (Ron) Lee WydenPelosi pulls vote on FISA bill after Trump veto threat FISA 'reform': Groundhog Day edition Hillicon Valley: House FISA bill in jeopardy | Democrats drop controversial surveillance measure | GOP working on legislation to strip Twitter of federal liability protections MORE (D-Ore.) in a statement. "We urge other countries that have proposed digital services taxes to follow suit. The multilateral OECD process offers the greatest potential for long-term success in resolving complex tax issues created by digitalization. We will continue to support that effort."

—Updated at 5:51 p.m.