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Despite the very strained relationship that he has with Big Tech at home, US President Donald Trump seems determined to protect their business abroad.
As the saga of Britain’s attempt to follow through on the 2016 Brexit referendum and leave the European Union continues, Trump is warning that this special US ally will be left out in the cold of a post-Brexit, potentially very lucrative free trade deal if it moves ahead with imposing more taxes on the likes of Google, Facebook, Amazon, and Twitter.p
The plan to impose additional taxes on the tech giants who often engage in tax avoidance outside the US was drafted by former British Chancellor Phillip Hammond.
The tax proposal should become law in the fall, and come into force in April of next year. The report said that the 2 percent additional taxing on profits would not cover “online sales of goods, advertising revenue or the collection of data” – instead, it will only apply to “digital advertising where the platform makes money from targeting UK users.”
But the idea of fairness voiced by Hammond last October – namely, that those making money in the UK should pay appropriate taxes there – is not shared by the Trump administration.
The issue of its EU membership aside – UK is not alone in Europe in seeking ways to impose additional taxes on US tech giants with a global reach. France wants to introduce a 3 percent tax – but Trump has threatened to counter this by targeting French wine imports to the US with “strict tariffs.”
Last week, the President said:
“If anybody taxes them, it should be their home country, the USA. We will announce a substantial reciprocal action on [French President] Macron’s foolishness shortly. I’ve always said American wine is better than French wine!”
UK’s wine industry doesn’t seem to be in any jeopardy here. However, the White House has made it clear that if the country introduces more taxes on Big Tech, it can expect the post-Brexit free trade negotiation to be anything but pleasant.
In fact the Trump administration source said it very clearly to the UK: “We will not begin free trade negotiations with you.”
In July, Trump congratulated UK’s new prime minister, Boris Jonson – and made sure to point out that a new special trade deal would be much more significant than the one the country enjoyed while a member of the EU.