Published: Fri, January 24, 2020
Markets | By Otis Pena

U.S. officials see EU, British trade deals in 2020, not India

U.S. officials see EU, British trade deals in 2020, not India

After the USA slapped tariffs on French wine and cheese, Paris agreed to suspend the digital tax pending further talks.

Treasury Secretary Steven Mnuchin said on Thursday the US government can not sustain federal deficits growing at current levels and will have to slow the rate of spending.

Mr. Mnuchin said those taxes are "discriminatory in nature" because they mostly affect US companies.

France has imposed a 3pc levy on the digital revenue of companies that make their sales primarily in cyber space, such as Facebook and Alphabet's Google. The U.S. was ready to impose tariffs as high as 100 percent on $2.4 billion of signature French goods including sparkling wine and cheese.

Under the truce agreed with Trump, France has agreed to suspend its tax until the end of this year while countries work toward a solution at the OECD, finance minister Bruno Le Maire said at a press conference in Davos.

"After she goes and studies economics in college, she can come back and explain that to us", he said at the World Economic Forum in Davos. "It's not easy in 11 months but I think it is still possible".

It was the same law the Trump administration used to slap tariffs on steel and aluminium imports.

The proposals will see digital firms hit with a two percent levy on revenues made from United Kingdom consumers, but the Chancellor said the plans had been created to "fall away" once an worldwide agreement had been brokered.

Chancellor Sajid Javid has already insisted that the "proportionate" tax will kick in from April as planned.

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Internet companies have always been the target of complaints that they don't pay enough in taxes, and other countries in the European Union are also taking action.

A Government source said a planned United States visit by the Prime Minister to hold trade talks with President Trump at the White House previously expected next month was now likely to go ahead in March.

If the OECD talks break down, Le Maire stated that France will have some form of digital tax in place at the end of this year.

The UK is among numerous nations pushing for an agreement in the OECD to alter how corporate taxation operate on a global level but these talks hit an impasse at December following the USA sought to water down them by making them optional. That opened the door to the U.S.'s threat to retaliate.

For its part, the French government had warned that the European Union would retaliate if the US imposed additional tariffs.

Mnuchin said the goal of tariffs, and the threat of tariffs, "is to get free, fair and reciprocal trade".

"I very much doubt that would occur this year", he told Fox Business Network.

Liz Truss today dismissed United States fury over UK plans to impose a tax on tech giants as the risk of a trade war with Washington increased.

Neither the trade spokesman of the European Commission, the EU's executive arm in Brussels, nor a spokesperson of the Croatian government, which holds the bloc's rotating presidency, is aware of any emergency meeting on transatlantic commercial tensions.

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