Trump goes to bat for big tech in global trade talks

Mint

2 days ago

The Trump administration is using its global trade wars to advance the interests of the U.S. technology industry, seeking to prevent foreign countries from targeting American internet firms.
The administration hopes to use the threat of tariffs and access to the U.S. economy to stop multiple countries from imposing new taxes, regulations and tariffs on American tech companies and their products ahead of a self-imposed Aug. 1 deadline, when higher levies are scheduled to take effect for dozens of trading partners.
Measures targeting America's internet giants remain a sticking point in discussions with Brazil, South Korea and the European Union, according to people familiar with the discussions. Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer are scheduled to meet Friday in Washington with South Korea's trade and finance ministers.
President Trump's abrupt termination of trade talks with Canada last month over that country's proposed digital-services tax highlighted his administration's focus on the dominance of the American tech sector. Canada quickly rescinded the tax to salvage trade discussions.
The emphasis on protecting America's internet companies abroad follows a yearslong campaign by tech companies, which have warned that what they call unfair taxes and regulations overseas could restrict the amount they can invest in the U.S. The U.S. approach to foreign digital taxes represents a win for an industry that nevertheless faces issues with the Trump administration domestically, including antitrust challenges and the impact of tariffs on their businesses.
'The companies have done a very good job at making the big tech agenda America first," said Nu Wexler, a public affairs consultant who previously worked at tech companies including Meta Platforms and Google. Many companies and executives donated millions of dollars to Trump's inauguration.
Google CEO Sundar Pichai was among tech leaders in attendance for President Trump's inauguration in January.
Tech companies have found allies on digital trade in Commerce Secretary Howard Lutnick, Bessent and Greer. In the deal with Indonesia, U.S. negotiators secured commitments that the Jakarta government would drop plans to tariff electronic goods such as movies or software downloads. Similar commitments have been secured from Vietnam, say people familiar with the plans, though the administration has yet to release documentation of that deal.
The administration is committed to delivering on Trump's pledge to defend innovative U.S. companies from unfair practices overseas, White House spokesman Kush Desai said.
Brazil is focused on resuming trade talks, not retaliatory measures, a government official said.
The European Commission, which is in charge of EU trade policy, declined to comment. The South Korean and Vietnamese embassies didn't respond to requests for comment.
Veterans of the first Trump term say the president has long opposed efforts from other countries to tax and regulate U.S. tech companies, even as he often battles them on the home front.
Trump 'sees this as a way for other countries to grab revenue unfairly from U.S. companies," said Everett Eissenstat, a former deputy director of the National Economic Council.
When the European Union imposed hefty fines on Google and other tech companies in his first term, Trump referred to the bloc's then-competition czar as a 'tax lady" who 'really hates the U.S." The U.S. initiated probes of digital taxes in countries including France in 2019 that stalled during the Biden administration.
Countries have long tried to allocate more of Silicon Valley's profits from digital advertising and online activities to their territories. Many are ramping up regulations for taking down misinformation, promoting transparency and keeping minors safe online. Some are trying to strengthen antitrust laws.
Vice President JD Vance attended an AI summit in February in Paris.
The Biden administration hoped a multilateral process would address digital-services taxes, but that effort stalled. Many tech executives felt former President Biden ignored the rise of overseas regulations.
'The U.S. government has finally acknowledged there is a fire we must put out," said Matt Schruers, chief executive officer of the Computer & Communications Industry Association trade group.
Skeptics say the administration is battling for an already thriving industry that doesn't need its support while overlooking other segments of the economy that are more exposed to tariffs. Democrats have criticized Trump's ties to tech and cryptocurrency executives.
After Trump was elected the second time, tech leaders including Meta CEO Mark Zuckerberg and Google's Sundar Pichai made pilgrimages to Trump's Mar-a-Lago club in Florida. Curbing what they said were harmful policies overseas consistently came up in the conversations, people familiar with the conversations said.
As administration officials threatened eye-watering tariffs on goods from many countries, they also demanded that those governments relax some of their tech restrictions. In March, India withdrew its digital-services tax. India and the U.S. are still negotiating, but Trump has said he thinks a deal is close.
Canada's digital tax was seen as a bellwether because it could have encouraged other countries to follow through on similar measures. Ottawa's levy was expected to cost U.S. tech companies about $3 billion and included a retroactive component back to 2022.
President Trump and Canadian Prime Minister Mark Carney last month at the G-7 summit in Alberta, Canada.
In late June, Trump and Canadian Prime Minister Mark Carney clashed over the digital tax at a Group of Seven summit in Canada. Some tech companies were preparing to make the payments when Trump stepped in just before the deadline. The two sides haven't yet reached a trade deal, and Carney has indicated U.S. tariffs might remain in place even with an agreement.
Last week, shortly after Trump said he would impose 50% tariffs on Brazilian goods, Greer initiated a tariff investigation on Brazil under a section of U.S. trade law targeting unfair trade practices. Trump cited the country's legal action against Jair Bolsonaro, Brazil's former president and one his political allies. The investigation includes Brazil's digital-trade and electronic-payments practices, the latest salvo cheered by the tech sector.
'This is a very acute focus right now," CCIA's Schruers said.
Write to Amrith Ramkumar at [e-mail] and Gavin Bade at [e-mail]