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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 MnuchinDemocrats justified in filibustering GOP, says Schumer Yellen provides signature for paper currency Biden's name will not appear on stimulus checks, White House says 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 TrumpVeteran accused in alleged border wall scheme faces new charges Arizona Republicans to brush off DOJ concern about election audit FEC drops investigation into Trump hush money payments 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 MacronThousands march in May Day protests across France The Hill's Morning Report - Biden launches blitz for jobs plan with 'thank you, Georgia' Biden, Harris, Harry and Meghan added to 'Vax Live: The Concert to Reunite the World' 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 GrassleyChuck GrassleyGrassley asks Blinken to provide potential conflicts involving John Kerry Overnight Defense: Gillibrand makes new push for military sexual assault reform | US troops begin leaving Afghanistan | Biden budget delay pushes back annual defense policy bill Gillibrand makes new push for military sexual assault reform MORE (R-Iowa) and ranking member Ron WydenRonald (Ron) Lee WydenPutting a price on privacy: Ending police data purchases Overnight Health Care: Biden sets goal of at least one shot to 70 percent of adults by July 4 | White House to shift how it distributes unallocated vaccines to states Pallone commits to using 'whatever vehicle I can' to pass Democrats' drug pricing bill 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.