Mnuchin Backs Trump's Threat of Tariffs Against European Car Companies -- Update

Date : 01/22/2020 @ 11:40AM
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Mnuchin Backs Trump's Threat of Tariffs Against European Car Companies -- Update

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By Paul Hannon

 

The U.S. may impose tariffs on imports of European automobiles if countries on the continent press ahead with plans for taxes on digital companies such as Alphabet Inc.'s(GOOG) Google and Facebook Inc. (FB), U.S. Treasury Secretary Steven Mnuchin said Wednesday.

"If people want to just arbitrarily put taxes on our digital companies, we'll consider arbitrarily putting taxes on car companies," Mr. Mnuchin said at a panel during the World Economic Forum's annual meeting in Davos.

He also said a fresh trade deal between the U.S. and China that could see tariffs rolled back might be possible before November.

On Monday, France agreed to delay the imposition of its own digital tax in the face of threats of steep U.S. tariffs on French exports. But the U.K. reaffirmed its plan to tax digital companies from April, while Italy and Austria also have digital taxes.

Mr. Mnuchin said those taxes are "discriminatory in nature" because they mostly affect U.S. companies.

In an interview on the sidelines of the World Economic Forum on Tuesday, President Donald Trump said he would impose new tariffs on European car imports if the European Union didn't agree to a new trade deal.

Despite the threat, U.K. treasury chief Sajid Javid said his government will introduce its digital tax as planned.

"We plan to go ahead with our digital services tax," he said, while speaking on the same panel as Mr. Mnuchin. "It is a proportionate tax, and it is a tax that is deliberately designed as a temporary tax."

Mr. Mnuchin said he and Mr. Javid would "be having some private conversations about that" and said he expects Mr. Trump to engage with U.K Prime Minister Boris Johnson on the issue.

"I'm sure the president and Boris will be speaking on this," he said.

The U.S. and China last week reached a eight-part agreement that acts as a cease-fire in a two-year trade war. But it left in place U.S. tariffs on about $370 billion in Chinese goods, or about three-quarters of Chinese imports to the U.S.

Possible tariff reductions were left to later negotiations, known as "phase two." They will cover a host of difficult issues at the heart of the trade battle, including Chinese subsidies to domestic companies and Beijing's oversight of Chinese state-owned firms. Those talks are expected to begin soon.

Mr. Mnuchin said Wednesday it was possible the talks could be concluded before the November presidential elections. Most trade experts had expected the talks to run beyond that date, given the complexity of the issues to be addressed.

"We dealt with a lot of important issues in phase one," said Mr. Mnuchin. "If we get it done before the election, good. If not, fine. There's no deadline."

Most economists judge that higher tariffs on trade between the U.S. and China have slowed global economic growth. But Mr. Mnuchin defended their use, saying China and other countries wouldn't have come to the negotiating table without their imposition.

"They're a big incentive for China to continue to negotiate," he said. "It's about free, fair and balanced trade. This is good for us, and good for them."

Speaking on the same panel, the head of the International Monetary Fund said trade disputes would continue to dampen global growth this year, although the agreement between the U.S. and China was "a piece of good news."

"Trade truce is not the same as trade peace," said IMF Managing Director Kristalina Georgieva. "Trade peace is what we should be looking for."

 

Write to Paul Hannon at paul.hannon@wsj.com

 

(END) Dow Jones Newswires

January 22, 2020 06:25 ET (11:25 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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