US propose damaging new export tariffs in retaliation to UK’s Digital Service Tax

President Biden has announced plans to place tariffs on select UK goods travelling across the Atlantic in retaliation to the UK’s Digital Services Tax (DST).

The new tariffs would mean that the US would raise $325 million (£235.8 million) on goods such as ceramics, make-up, overcoats, games consoles and furniture.

Head of the UK Fashion & Textile Association Adam Mansell called the threat to UK manufactured overcoats “hugely disappointing”.

Mansell also pointed out that the US only just removed a different tariff on other British made fashion goods last month.

“At a time when we are trying to start discussions over a UK-US trade deal, it is extremely important that both governments get around the table to remove this threat as soon as possible,” Mansell commented.

The figure proposed is equal to the amount the US believes the UK would gain from the DST of companies such as Ebay, Amazon, Google and Facebook which are all US based.

The UK trade department introduced the two per cent DST in April last year in a bid to make “tech firms pay their fair share of tax”.

However, the Biden administration has hit back at the proposed taxation of America’s big tech in the UK, saying it is “unreasonable, discriminatory, and (has) burdensome attributes”.

READ MORE: Government slammed for allowing Amazon to exploit “glaring loophole” in digital services tax

International delivery company ParcelHero has deemed the timing of the introduction of the tax poor.

“Many of Britain’s best-loved brands will pay a heavy price for the misguided tax, just as their EU markets shrink through excessive red tape and costs following Brexit,” head of consumer research at ParcelHero David Jinks said.

The DST has been unsuccessful in its mission so far, with many tech companies exploiting big loopholes.

Tech giant Amazon told its sellers that they’d have to pay the two per cent on top of what they already pay to use its platform, effectively dodging the tax.

Google also avoided the tax by charging advertisers additional fees on popular streaming platform Youtube and its own search engine.

A spokesperson from the US retaliated: “Should the US proceed to implement these measures, we would consider all options to defend UK interests and industry.”

A UK government spokesperson argued: “Our digital services tax is reasonable, proportionate and non-discriminatory

“It’s also temporary. We’re working positively with the US and other international partners to find a global solution to this problem and will remove the DST when that is in place.”

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