UK exports to the US are likely to be caught up in a round of retaliatory tariffs as Washington DC targets countries that have implemented taxes against US digital giants.
The taxes, which mainly affect US internet giants such as Amazon and Facebook, could see UK exporters of art supplies, make-up and cosmetics, clothing, boat-swings and other fairground amusements hit by up to 25% tariffs.
Tit-for-tat
Bloomberg reports that the UK is one of six nations that have already started taxing internet-based companies and, as a result could face a total almost $1bn in tit-for-tat tariffs annually.
UK companies could be in line for a $325mn hit. Other countries affected are Austria, India, Italy, Spain and Turkey.
France is also facing a $1.3bn tariff threat against exports to the US after introducing its own digital tax, reports Silicon.
No global deal
A global deal on digital tax was being sought under the auspices of the OECD, but, as reported in the IOE&IT Daily Bulletin the US suspended its involvement in multilateral negotiations in June, saying it felt its own tech sector was disproportionately affected.
US trade representative Katherine Tai says the Biden administration is committed to the OECD process, but will maintain its options, including tariffs, in the meantime.
The UK introduced its own digital services tax in April 2020, which applies to businesses with more than £500m in global group digital services revenues and £25m in UK digital services revenues.