Tensions in transatlantic trade policy are rising again. At the center of the issue is the long-discussed introduction of a European digital tax. U.S. President Donald Trump has now once again made it unmistakably clear that, should such plans be implemented, he will respond with retaliatory measures in the form of punitive tariffs. The tax would primarily affect large American internet and technology companies, whose profits in Europe, in the view of many EU member states, have not been sufficiently taxed to date.
Brussels Rejects Threats
The reaction from Brussels was not long in coming. A spokesperson for the European Commission described the threat of unilateral trade measures as unjustified. The goal is to ensure fair and growth-friendly taxation of the digital economy. Threats of punitive tariffs are unhelpful in this context and are completely unfounded. The EU reserves the right to respond resolutely to any measures taken by Washington.
A simmering point of conflict
The debate over a digital tax is nothing new. For several years now, EU member states have been struggling to agree on a common approach to taxing the profits of digital corporations where they are generated—and not just where the companies are headquartered for tax purposes. The repeated threats from the U.S. demonstrate just how sensitive this issue remains for economic relations between Europe and the United States. While a solution at the international level—for example, within the framework of the OECD—is being sought, it continues to prove extremely difficult to achieve.
