Barney Jopson in Washington and Rochelle Toplensky and Jim Brunsden in Brussels
A transatlantic rift over tax and trade widened on Friday after Washington opposed the EU’s plans for a levy on digital revenues and Brussels set out its retaliatory measures over the US’s steel and aluminium tariffs.
Steven Mnuchin, US Treasury secretary, said the US was firmly against proposals by any country to single out technology companies, as the EU stepped up efforts to raise more taxes from American tech groups including Google, Facebook and Apple.
While he did not specifically refer to Brussels’ plan to unveil its “digital tax” proposals next week, his comments add to growing tension with the EU days before the Trump administration is set to impose a 25 per cent tariff on steel and a 10 per cent tariff on aluminium.
The European Commission on Friday sent a note, seen by the FT, to the US administration setting out its case for why the EU should be excluded from the punitive tariffs, saying China was “clearly the problem” when it came to “unfairly traded” steel imports.
“This is why we have 50 per cent of steel measures affecting China and why in the last two years all steel investigations have concerned China,” the note said.
Brussels also on Friday published a draft list of close to 200 US products that would be targeted for higher duties if the EU failed to secure an exemption from the tariffs. The list covers some €2.8bn of US exports ranging from whisky to motorbikes.
The White House said on Friday that President Donald Trump was negotiating with “a number of individual countries” over the possibility of providing exemptions to the tariffs.
The note from Brussels is based on guidance received from Washington about the criteria it will apply — which includes whether it has a strong security relationship with Washington — when determining if a country should be hit by the tariffs.
EU officials stressed that Brussels’ tax plan for digital revenues did not solely target US tech groups and said the levy would hit more than 100 companies around the world.
The proposal would alter a longstanding consensus to tax companies based on profits by instead targeting revenues in Europe, according to draft proposals seen by the FT.
“Some of these companies are among the greatest contributors to US job creation and economic growth,” Mr Mnuchin said, adding: “Imposing new and redundant tax burdens would inhibit growth and ultimately harm workers and consumers.”
Many EU member states and the commission are frustrated with the slow pace of tax reform and about a dozen countries are considering interim measures.
“International progress does not give cause for much optimism on either the pace or scope of digital tax reforms we can expect. There has been very little appetite among key global players to find concrete solutions,” said Pierre Moscovici, the EU’s commissioner for tax.
The EU levy would apply to revenue from a combination of sources: advertising sales by digital companies such as Google; fees from users and subscribers to services such as Apple or Spotify; and revenue from selling personal data to third parties.
A draft proposal this week said the tax would hit companies with an annual global turnover of more than €750m and total taxable revenues of €50m generated in the EU.
The commission still hopes to avert an outright clash with the US over the steel tariffs. Peter Altmaier, Germany’s economy minister, will head to Washington on Sunday for meetings with administration officials, while Cecilia Malmstrom, the EU’s trade commissioner, is set to meet US commerce secretary Wilbur Ross next week.
Brussels said publication of the retaliation list was needed to respect tight timelines set by the World Trade Organization for countermeasures to be put in place. “We need to be sure that we protect our rights,” one official said.
