President Trump threatens to double tax rates for foreign firms
Donald Trump has threatened to double tax rates for foreign nationals and companies in the US in what he said was a bid to hit back at “discriminatory” duties on American firms.
The President set out a memo on his ‘America first’ trade policy on Monday which referred to an almost 100-year old element of the US tax code – Section 891 – which allows him to impose higher taxes on foreign citizens and businesses within America.
His order asks the Treasury secretary to “investigate whether any foreign country subjects US citizens or corporations to discriminatory or extraterritorial taxes” so it conforms with Section 891 – which does not require the approval of Congress.
This section states that when a president formally decides this discrimination exists, the tax rates “be doubled in the case of each citizen and corporation of such foreign country”.
He also set out another policy memo which withdrew the US’s support for the
Organisation for Economic Co-operation and Development (OECD)’s global tax pact from last year, which allows other nations to impose extra duties on US multinational firms.
‘The EU is very, very bad to us’
During his previous presidency, Trump clashed with EU leaders over planned digital services taxes on US big tech firms including Apple and Google.
It comes as Trump also vowed to impose tariffs on the European Union (EU) and said his White House was considering a 10 per cent duty on Chinese imports over fentanyl being sent into the United States from China via Mexico and Canada.
But despite signing a raft of executive orders on his first day in office, the 47th President did not issue immediate tariffs on foreign countries as he suggested during his campaign.
He told reporters: “The European Union is very, very bad to us.
“So they’re going to be in for tariffs. It’s the only way … you’re going to get fairness.”
Trump has reiterated his plans for a February 1 deadline for 25 per cent tariffs against Canada and Mexico, and suggested the EU and other countries could be in his sights.
According to Reuters, a spokesperson for the Chinese ministry said while the government wants to maintain communication with the US: “We always believe that there is no winner in a trade war or tariff war. China will always firmly safeguard its national interests.”