The US has slapped new trade tariffs on six nations including the UK as President Joe Biden seeks to corral fellow economies into backing his proposals for a global tax deal.
After announcing tariffs worth 25 per cent against $2bn worth of goods from the UK, Italy, Spain, Turkey, India and Austria, the White House immediately suspended them in order to focus on the current trade talks.
If a deal is not reached within six months, then UK goods such as clothing, footwear, and furniture with a total value of $887m will face the levy.
The US has gone after the above countries in retaliation for digital services taxes on US-based tech giants such as Alphabet, Apple and Facebook.
Taxing such firms is one of the UK’s key demands in the wider negotiations over establishing a global corporation tax.
Biden’s administration is looking to set a minimum tax rate of 15 per cent, but has faced opposition from Chancellor Rishi Sunak.
But yesterday Sunak admitted that the plan could work – but only if it included the tech giants, which the US has so far demurred on.
“It’s certainly something we can work with as long as it meets our objectives of getting at the right companies and on the face of it, it can,” Sunak told Reuters.
The plan, which would focus on the profits of the 100 biggest companies, will be discussed by G7 finance ministers at this weekend’s summit.
Commenting on the threat of tariffs, a UK government spokesperson said: “Our digital services tax is reasonable, proportionate and non-discriminatory.
“It’s also temporary and we’re working positively with international partners to find a global solution to this problem.”