Unable to bear it any longer, the EU proposes to suspend tariffs with the US for 6 months

"We have proposed to suspend all mutual tariffs for six months in order to reach a negotiated solution," EU trade chief Valdis Dombrovskis told Germany 's Der Spiegel magazine in an interview on Saturday, Reuters reported.

That said, the EU has proposed that the EU and the US suspend tariff collection actions on billions of dollars of imports for six months, which Dombrovskis said would "create the necessary breathing space for industry and workers on both sides of the Atlantic."

In fact, the EU and the US reached a four-month trade suspension agreement as early as March, covering all tariffs on $7.5 billion of EU imports and all tariffs on $4 billion of US products. Previously , the World Trade Organization (WTO) had also filed a long-standing lawsuit against the United States over subsidies for Airbus and Boeing aircraft manufacturers, and this move was also to resolve the subsidy dispute between Boeing and Airbus.

Dombrovskis said the EU would closely monitor Biden's "Buy American" executive order, which will boost purchases of American products by federal agencies , and said: "Our goal is to make procurement markets around the world as open as possible . "

At the end of March, the Office of the United States Trade Representative announced that it would launch an investigation into the "digital service tax" of Austria, India, Italy, Spain, Turkey and the United Kingdom, and may take measures to impose punitive tariffs on them. In response to the digital service tax imposed by France on the United States, the United States may impose higher retaliatory tariffs on champagne, cosmetics, handbags and other goods worth US$1.3 billion imported from France.

According to data from the World Bank, the digital economy has created 15.5% of global GDP. Over the past 15 years, the growth rate of the digital economy has been 2.5 times that of global GDP. More and more multinational technology companies have created huge commercial value in the digital economy, which has also brought great challenges to the global tax system.

In order to cope with the accelerated transformation of the digital economy, the European Union took the lead in proposing the "Digital Services Tax Proposal" in March 2018 to promote the EU's tax reform, but no consensus was reached at the EU level. Since then, some EU member states have begun to formulate their own digital tax plans.

Many European countries believe that the current tax system is mainly formulated for traditional enterprises, and there are many gray areas for emerging Internet companies, resulting in insufficient tax payment by Internet companies. Therefore, all countries are working hard to formulate digital taxes and regulate the commercial taxation of Internet companies.

The US has adopted the attitude of "retaliating against anyone who collects digital taxes". It has not only launched a "301 investigation" against France, which was the first to pass the digital tax plan, but also imposed tariffs on it in retaliation. In July 2020, the Office of the US Trade Representative also issued a statement that if France does not abandon the new digital tax plan, the United States will impose an additional 25% tariff on US$1.3 billion worth of goods imported from France, which is a considerable blow.

In this light, it is understandable that the EU, facing such high pressure today, wants to suspend mutual tariffs to gain a breathing space. However, given the volume of trade between the United States and the EU and the United States' consistent hegemonic practices, the situation the EU will face in the future will only become more and more difficult.

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