As you may recall, the Trump regime threatened to impose all news tariffs on European goods after members of the European Union started imposing taxes on digital services provided by the likes of Facebook and Google. The regime even started the formal process and set a deadline for imposing those tariffs, but the Biden administration will not be moving forward with that plan.
The Biden administration had not formally abandoned the plan to impose those tariffs, but they were called off at the last minute because the taxes won't exist in the near future. The taxes on digital services are being replaced by a universal minimum tax.
Austria, Britain, France, Italy, Spain will get to keep their digital taxes in place until a global tax agreement comes into force in 2023, under the plan jointly announced with Washington.
Under the agreement announced on Thursday, any digital taxes the countries collect from such firms after January 2022 that exceed what they would have to pay under the new rules would be credited against the firms' future tax liabilities in those countries.
In exchange, the United States agreed to drop its planned tariff retaliation against the five countries on the grounds that their taxes discriminated against American companies.
It's no surprise that the Biden administration is not going to escalate Trump's trade war when they're so close to finally ending it, but I understand why the threat of doing so was kept in place even if the rationale behind it is preposterous.
The idea that a tax on digital services discriminates against Americans doesn't hold up when you consider that these are global corporations who service more users outside of the United States than inside. They may be owned by Americans, but they are not exclusively American companies. Facebook has over 2 billion active users across the world and only 200 million of them are Americans. There's almost twice as many Facebook users in India than the United States.
Even if that were not the case, I do not like the idea of telling other countries who they can and cannot impose taxes on within their own borders. That's a threat to sovereignty that could be turned back against us in the future.
The Biden administration let the Trump regime's threat linger for appearances, not for substance.