U.S. Takes On Canada Over Digital Services Tax

The U.S. has initiated trade dispute consultations with Canada regarding its new digital services tax, citing discriminatory practices inconsistent with the USMCA. If unresolved in 75 days, the U.S. may request a dispute panel, potentially leading to tariffs. Affected companies include tech giants like Google and Apple.

In a significant move, the Biden-Harris administration has requested trade dispute settlement consultations with Canada over its recently enacted digital services tax. The U.S. Trade Representative's office stated that the 'discriminatory' tax appears to violate Canada's obligations under its North American trade deal.

The USTR will initially seek to resolve these concerns through consultations. Should these discussions fail to yield an agreement within 75 days, the U.S. could escalate the issue to a dispute settlement panel under the USMCA, potentially resulting in retaliatory tariffs on Canadian imports.

Previously, the USTR had prepared retaliatory duties against countries like Austria, Britain, and France over similar digital taxes but suspended them as global talks on taxing multinational corporations progressed. However, these negotiations have hit technical roadblocks. The U.S. asserts that these taxes, which target revenues from tech giants such as Google, Apple, and Amazon, unfairly discriminate against American companies.

'The United States opposes unilateral digital service taxes that discriminate against U.S. companies,' said U.S. Trade Representative Katherine Tai. 'We are committed to working through OECD/G20 negotiations to achieve a comprehensive solution to the challenges posed by DSTs,' Tai added.

(With inputs from agencies.)