Mnuchin uses auto tariff threats as leverage over digital taxes

Andrew Cummings
January 24, 2020

The UK government plans to go ahead with a tax on digital services in April, according to Mr Javid.

It argued the move would discriminate against American companies like Google and Facebook.

In what was ostensibly a veiled threat aimed at his United Kingdom counterpart, the USA treasury secretary warned that if his country's digital companies face "arbitrary taxes", then in response they would "consider putting arbitrary taxes on their vehicle companies".

Mrs Leadsom said: "Ideally there would be more providers of infrastructure similar to the work that Huawei does, but the United Kingdom is looking very carefully at this issue and we will be making a final decision soon".

The UK's upcoming law is not the first proposal of its kind in Europe.

The US and France have announced a truce over President Emmanuel Macron's plans to introduce a similar measure after Washington responded with a threat to slap punitive tariffs on products including French cheese and wine.

But despite the transatlantic disagreement over taxing technology companies, both U.S. President Donald Trump and Mnuchin have said at Davos that they are willing to work with the United Kingdom on a trade deal when it leaves the European Union at the end of January.

Meanwhile, International Trade Secretary Liz Truss also batted away suggestions from MPs that the Government was preparing to bow to the USA threats in a bid to boost the chances of a post-Brexit trade deal.

Britain's Chancellor of the Exchequer Sajid Javid leaves 11 Downing Street in London, UK, September 4, 2019.

"I think what I saw coming out was that they wanted to accomplish both these deals in 2020", said Mnuchin.

Other countries are also taking action.

The US Department of Justice recently said the White House could use its executive privilege to decline to release a Commerce Department report advising president Trump on proposed tariffs on imports of automobiles and auto parts.

"Ultimately, it will be very easy because if we can't make a deal, we'll have to put 25 percent tariffs on their cars", Trump told Fox Business Network separately.

Though the important, Britain conducts far more business with the other 27 countries of the European Union - that's why so many businesses want economic relations to be as close as possible.

Business as usual for the U.S.?

UK finance minister Sajid Javid, who was also on the panel, stated he prepared to go ahead with the digital services tax in April, even as the nation looks forward to negotiating a new free trade deal with the United States after Brexit.

As he acknowledged the administration of Republican President Donald Trump was considering additional tax cuts to stimulate the economy, Mnuchin blamed government spending - and Democrats in Congress - for the federal deficit.

"He needs Americans blaming others for domestic failures that are in fact Washington's fault", he added.

U.S. Commerce Secretary Wilbur Ross said that a trade deal between the two countries shouldn't be too hard and said there are fewer differences between the two countries than with the EU.

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