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NDTV
12 hours ago
- Business
- NDTV
Digital Services Tax: Trump's Latest Beef With Canada
New Delhi: US President Donald Trump is once again going after Canada. He has announced through Truth Social that he is "terminating all discussions on trade" with Canada with immediate effect. The reason for his tirade this time is the Digital Services Tax. The Digital Services Tax was enacted last year, but companies are expected to start paying the tax from June 30. And since it will directly impact the big tech companies and large e-commerce platforms headquartered in the US, President Trump is seeing red. What is the Digital Services Tax The Digital Services Tax requires foreign and domestic large businesses to pay revenue tax that is earned from engaging with online users in Canada. It applies a three per cent tax on revenue earned from some digital services that rely on engagement, data, and content contributions. So, the taxable revenue could be generated through online marketplace services, online advertising services, social media services, and sales of user data. The Digital Services Tax will apply to companies or groups with annual global revenues of €750 million or more and Canadian digital services revenue of more than CAD 20 million. Significantly, the tax is retroactive to January 1, 2022, and companies will start paying the tax on June 30, 2025. Canada's rationale vs US pushback The overarching premise of the Digital Services Tax is that if big companies, that are based abroad, are earning significant revenue from Canadian users, then Canada should be able to tax a portion of that income. The revenue that Canada would make from the Digital Services Tax is expected to be around $875 million per year, said a note from the US Trade Representative last year. Over five years, the Digital Services Tax will increase federal government revenues by CAD 7.2 billion, per the Canadian Parliamentary Budget Office. The Computer and Communications Industry Association (CCIA) in the US claims that companies will end up paying up to $3 billion in taxes to Canada. It is also predicting 3,000 US job losses. What has been US' response in the past The US Trade Representative (USTR) had previously investigated Digital Services Tax in other countries and said that it had found them discriminatory toward US companies. The US had announced plans for retaliatory tariffs against the countries with Digital Services Tax and had said it would use the same yardstick for Canada. In August 2024, USTR Katherine Tai announced that the United States had requested dispute settlement consultations with Canada under the United States-Mexico-Canada Agreement (USMCA or CUSMA) regarding Canada's Digital Services Tax. The USTR had alleged that Canada's tax appeared to be inconsistent with its commitments under the Cross-Border Trade in services and investment chapters of the USMCA, not to treat US businesses less favourably than Canadian businesses. The US said that it had raised the concern with Canada in three official comments about its plan to enact a Digital Services Tax in June 2021, February 2022, and in September 2023. The US Chambers of Commerce has called the Digital Services Tax "discriminatory" and said that it is in contravention of prevailing international tax principles. It adds that doing so would not only discriminate against US companies but also directly contravene Canada's obligations under both the US-Mexico-Canada Agreement (USMCA) and the World Trade Organisation. Hence, President Trump's reaction to the Digital Services Tax as the date of payment closes in is hardly a surprise. Why is Canada not flinching yet on Digital Services Tax Earlier this month, Canadian Finance Minister Francois-Philippe Champagne had said the Digital Services Tax was passed by Parliament, and the government would hence go ahead with the tax. The reason why Canada went ahead and implemented its own Digital Services Tax was that the global effort to establish a broader, multinational digital taxation plan had been woefully delayed. Some argue that the Digital Services Tax is a unilateral measure that would undermine the stability of the agreed multilateral framework. However, with the Trump administration imposing unilateral tariffs - from aluminum and steel to automobiles and energy, against Canada - this argument is unlikely to move Canada. At a time when Canada feels betrayed by its largest trading partner, the United States, and is already reeling under the onslaught of the punishing Trump tariffs, it is beginning to assert its economic leverage. And the Digital Services Tax could perhaps serve as a negotiating tool in the process.
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First Post
a day ago
- Business
- First Post
What's in 'very big pact' with India as Donald Trump's tariff deadline nears?
US President Donald Trump has claimed that a 'very big' deal with India could come soon. His remarks came as Indian negotiators landed in the United States on Friday for the final round of talks on a bilateral trade agreement (BTA). But what do we know? What do experts think? read more US President Donald Trump delivering remarks on tariffs in the Rose Garden at the White House in Washington. Reuters Is the trade deal between India and the US imminent? US President Donald Trump has claimed that a 'very big' deal with India could come soon. Trump's remarks came as Indian negotiators landed in the United States on Friday for the final round of talks on a bilateral trade agreement (BTA). Trump on April 2 – which he had dubbed 'liberation day' – had announced tariffs on dozens of nations. Trump later paused his 'reciprocal tariffs' and issued a 90-day deadline for countries to reach bilateral trade deals with America. STORY CONTINUES BELOW THIS AD That deadline is set to expire on July 9. 'Everybody wants to make a deal and have a part of it… we just signed with China yesterday. We are having some great deals. We have one coming up, maybe with India. A very big one. Where we're going to open up India. In the China deal, we are starting to open up China,' Trump said on Friday. 'We're not going to make deals with everybody. Some, we are just going to send them a letter, say thank you very much… My people don't want to do it that way. They want to do some of it, but they want to make more deals than I would do'. But what's in this 'very big pact'? What do experts think? Let's take a closer look: What's in this 'very big' pact? India's team is being led by Rajesh Aggarwal. Aggarwal, who is the chief negotiator, will be dealing with US officials including those from the Office of the United States Trade Representative (USTR). Trade between India and the United States touched $131.84 billion in the 24-25 Financial Year. If no deal is reached, India will face a base tariff of 10 per cent – lower than the 26 per cent Trump originally imposed. The US wants India to open up its agriculture, dairy, aviation and energy sectors. STORY CONTINUES BELOW THIS AD It wants India to reduce tariffs on soy, wheat, ethanol and corn – two of which are its top exports to China. The US also wants less tariffs on apples. Reports say the meetings between the two sides have been contentious at times – with the Indian side pushing back on US demands particularly when it comes to its sensitive agriculture and dairy market. The US wants India to open up its agriculture, dairy, aviation and energy sectors, while New Delhi is looking for Washington to cut tariffs on steel and auto parts The US also wants to sell genetically modified (GM) crops in India. However, the Indian side is pushing back to protect Indian farmers. They also say they do not want to undercut the Minimum Support Price (MSP) system in India. A NITI Aayog working paper in May suggested that New Delhi offer some concessions on 'soybean oil imports' to help redress the trade imbalance – which has become an obsession for Trump. India is the world's biggest importer of edible oil. India may agree to reduce tariffs on automobiles – a long-pending demand of the US. STORY CONTINUES BELOW THIS AD India, on the other hand, wants the US to roll back its reciprocal tariffs to zero. New Delhi also wants Washington to cut tariffs on steel and auto parts. The US had imposed a 50 per cent tariff on steel and aluminium, and a 25 per cent tariff on automobile imports from India. But there is a stumbling block. 'The US side first wants India to commit to deeper import tariff cuts on farm goods like soybeans and corn , cars and alcoholic beverages along with easing of non-tariff barriers,' an official in the know has said. What do experts think? Experts think a bilateral trade deal (BTA) could benefit traders exporting textiles, gems and jewellery, smartphones and pharmaceuticals to the US. However, they say a BTA could benefit US exporters particularly those sending walnuts, pistachios and cranberries more. They say this is because many of New Delhi's exports to Washington already have duty-free access to the market. They say the rest could get only a limited boost. Which is perhaps why some have suggested caution. 'The ball is now in the US court. India is not for any win-lose trade partnership,' Ram Singh, chief of the Indian Institute of Foreign Trade, told The Times of India. STORY CONTINUES BELOW THIS AD The Global Trade Research Initiative, for example, has warned against a deal that favours the US. India and the US in February had agreed to increase bilateral trade, which was at $262 billion in 2024, to $500 billion by 2030. Reuters 'The more likely outcome is a limited trade pact - styled after the US-UK mini trade deal announced on May 8,' GTRI Founder Ajay Srivastava said. 'Any trade deal with the US must not be politically driven or one-sided, it must protect our farmers, our digital ecosystem, and our sovereign regulatory space.' 'There may also be pressure on India to ease FDI restrictions in multi-brand retail, potentially benefiting firms like Amazon and Walmart and to liberalise rules on remanufactured goods, currently subject to stringent import norms,' Srivastava added. 'India must hold its ground and insist on a reciprocal, balanced, and transparent agreement,' the think-tank added. Indian officials have insisted that the country's interests will come first in any deal. 'Protecting India's interests will be supreme in India-US BTA talks,' an Indian official in the know said. Modi and Trump in February had agreed to increase bilateral trade, which was at $262 billion in 2024, to $500 billion by 2030. STORY CONTINUES BELOW THIS AD
India Gazette
a day ago
- Business
- India Gazette
'Will have comparative advantage even under older tariffs', say India's trade deal negotiators in US
New Delhi [India], June 27 (ANI): India's trade delegation is currently in the United States for high-stakes negotiations aimed at finalising a bilateral trade agreement as both nations race against a July 9 deadline to secure an interim deal before temporary tariff protections expire. The Indian delegation is being led by Chief Negotiator Rajesh Aggarwal, who is holding talks with officials from the Office of the United States Trade Representative (USTR). The negotiations, initially scheduled for Thursday and Friday, may be extended based on the progress of discussions, according to officials familiar with the matter. 'Protecting India's interests will be supreme in India-US BTA talks,' an Indian official close to the negotiations said, underscoring the sensitivity and significance of the ongoing dialogue. The talks come at a crucial juncture, as the 90-day suspension of specific tariffs announced on April 2 is set to expire on July 9. Several contentious issues have surfaced during the discussions. The US is pressing India to lower duties on American agricultural and dairy products and to provide market access for genetically modified (GM) crops. However, India has firmly resisted these demands, citing domestic concerns over food safety, public health, and the protection of millions of farmers. Indian negotiators have also pushed back against offering broad-based access to the US agricultural and dairy sectors, which are considered politically and economically sensitive. Despite these challenges, both sides remain committed to reaching an interim agreement before the deadline. If the talks fail, tariff structures could revert to their levels of April 2. Indian officials noted that even under the older tariff regime, India would retain a comparative advantage over several competing manufacturing economies. The negotiations received fresh momentum after US President Donald Trump recently expressed optimism about a potential trade deal with India. Speaking at a White House event on Thursday, Trump described the possible agreement as 'a great deal' and 'a very big one.' 'Everybody wants to make a deal and have a part of it. We have one coming up, maybe with India. Very big one,' Trump said, referencing recent trade pacts, including one with China. Trump also emphasised his preference for reaching negotiated deals over imposing tariffs but made it clear that he would not hesitate to act unilaterally if necessary. 'Some we are just going to send them a letter, say thank you very much. You are to pay 25, 35, 45 per cent. That's the easy way to do it,' he said, referring to possible tariff rates. As the July 9 deadline approaches, both India and the US are navigating a complex web of economic priorities, domestic sensitivities, and global trade pressures, with the outcome of these negotiations likely to shape the trajectory of bilateral trade for years to come. (ANI)
Hans India
a day ago
- Business
- Hans India
Prospects Rise for a New US-India Trade Deal, Says Trump
US President Donald Trump the morning of Thursday (local time) declared that the news that a "very large" trade agreement with India may be possible, just days after signing a brand new accord with China. In his speech at the Big Beautiful Event held at the White House, Trump said that the US is "going to be opening up India," hinting at substantial progress towards the long-awaited bilateral trade deal that would bring the two partners together as strategic allies. A huge deal with India due to be signed President Trump declared his belief that the US is close to concluding the largest trade agreement with India which he described as an "very important one" that could create new opportunities for economic growth between both countries. "Everybody wants to create an arrangement and be portion of the deal. Do you remember a few months ago when the press was asking, "Do you do not have anyone of any interested? Well, we agreed to a deal in China yesterday. We're having some amazing deals. We are planning to do one perhaps with India. It's a huge deal. In the process of opening up India as part of the China agreement, we're beginning to open China," he said. This is happening as a top-level Indian delegation, headed by chief negotiator Rajesh Agarwal, is in Washington for talks focused on bridging any gaps in the proposed agreement. In the month of June, US-India trade negotiators were in India to discuss the accord. They had said that the White House had said that the US demanded that nations submit their best proposals for closed-door talks as the deadline for July 8 to negotiate reciprocal tariffs was two weeks away. "I am able to confirm the legitimacy and the substance of this letter. This letter was sent by the United States Trade Representative (USTR) sent the note to our all trading partners to send them a friendly reminding them that deadlines are fast approaching close," White House spokesperson Karoline Leavitt said. US Secretary of Commerce Howard Lutnick had said that the US wanted to revive modern manufacturing technology and reduce the trade deficit through expanding exports to India while stating that both parties have "found the right place that can work" for both of them.
Wall Street Journal
2 days ago
- Business
- Wall Street Journal
China's Industrial Profit Declined in May
China's industrial profit declined in May from a year earlier, reversing gains seen in the prior month, as weak demand and U.S. trade tariffs weighed on profitability. Industrial profit fell 9.1% year over year in May, tumbling from April's 3.0% rise, data released by the National Bureau of Statistics showed Friday.
