The Biden administration on Wednesday threatened tariffs on goods from six countries that have imposed digital services taxes on tech companies such as Google and Facebook.
U.S. Trade Representative Katherine Tai announced the tariffs but immediately suspended the trade action for up to 180 days to provide additional time for international negotiations.
The taxes, which hit tech companies that don’t have corporate offices in the tax-levying country but have users or customers there, have been at the center of fierce international debate for at least two years as nations attempt to adapt to the new reality of global digital commerce.
“The United States is focused on finding a multilateral solution to a range of key issues related to international taxation, including our concerns with digital services taxes,” Ms. Tai said. “The United States remains committed to reaching a consensus on international tax issues through the OECD [Organization for Economic Co-operation and Development] and G-20 processes.”
She said the move allows for the talks to proceed while “maintaining the option of imposing tariffs.”
Under current international tax rules, multinational companies usually only pay corporate taxes in the country where they are headquartered or where their production is based — not in countries where they have customers.
The approval of the tariffs follows a yearlong trade investigation, known in Washington as a Section 301 investigation, that was launched by the Trump administration.
Former President Donald Trump was widely criticized for his use of tariffs in advancing trade policies, including in dealings with China and the European Union.
The digital service taxes target the biggest players in tech-based commerce and mostly impact U.S. companies.
Australia imposed a 10% digital service tax on nonresident tech companies, which is the highest rate among the six countries.
Turkey has a digital service tax rate is 7.5%, followed by Spain and Italy at 3% and the U.K. and India at 2%.