When is a tax an unfair foreign attack? Apparently, when it’s a tax on Big Tech. That’s the gist of a new White House memorandum declaring that foreign governments have been extorting American businesses through, it seems, the fair application of digital services taxes (DSTs) and related regulations.
The memo warns that these policies—particularly those of Europe and Canada—are unfairly burdening US companies and, absent repeal, will be met with retaliatory tariffs. This isn’t a bold stand for American workers or small businesses—it’s a protectionist policy toward Big Tech, designed to shield Silicon Valley giants from paying their fair share abroad.
Instead of asking why these taxes exist in the first place—because Big Tech parks profits in tax havens to avoid local levies—the U.S. is taking an aggressive stance that could spark a trade war.
Big Tech Protectionism Or Fairness
The White House memo frames the issue as a question of fundamental fairness: American technology companies are under siege from foreign governments imposing unfair taxes and regulations. It suggests these measures are less about economic policy and more about the outright plundering of U.S. businesses.
But here’s the thing—every country has the right to tax and regulate businesses that operate within its borders. The United States certainly does, and it exercises that right. If a Canadian, German or Japanese company wants to do business in the U.S., they are expected to comply with American tax laws. If they fail to comply, they get fined. That’s how sovereignty works.
When Europe, Canada or Australia apply the same principles to American companies, though, it seems it is suddenly outrageous. The memorandum appears to be less about fairness and more about ensuring American corporations receive special tax treatment abroad.
If France implements a DST based on the revenue generated by companies in France, and those taxes happen to fall on American companies, one cannot claim that the policy is designed to punish American firms absent additional information. The simple fact that American technology companies are some of the largest companies in the world and thus will necessarily see larger levies is not dispositive of some sort of anti-American bias.
At its core, the memorandum does not appear to be about free markets or economic fairness—but defending corporate privilege. The threat of tariffs is being used in an attempt to shield US companies from the same scrutiny and obligations that every other business in the world faces.
Selective Outrage On ‘Sovereignty’
The White House memorandum leans heavily on the concept of American sovereignty—arguing that the simple fact that American companies are taxed by foreign states in which they operate constitutes unacceptable overreach. The issue, though, is that the United States does the exact same thing regularly.
When it comes to applying laws beyond state borders, few countries are as aggressive as the U.S.. For instance, under the Foreign Corrupt Practices Act (FCPA), the US will prosecute foreign companies and executives for bribery—even if the alleged corruption happens outside the US. At least, that’s how it used to work.
Through the Clarifying Lawful Overseas Use of Data Act (CLOUD) Act of 2018, the U.S. claims the right to access data stored on foreign servers if it belongs to an American company—and to disregard any local privacy laws as it sees fit. These measures, and many more, extend U.S. legal authority beyond U.S. borders—sometimes with significant consequences for foreign businesses.
Now Europe, Canada, and other nations are attempting to enforce their own tax and regulatory policies on American firms operating within their borders and there appears to be an issue of sovereignty. That isn’t a principled stance—its hypocrisy.
The memorandum isn’t about fairness or ensuring economic competition, its about using the threat of a trade war to maintain an uneven playing field where US companies can operate abroad without being held to the same standards as local businesses. If the official position of the U.S. is one of respect for national sovereignty, it should respect the right of other countries to set their own tax and regulatory policies.
Ignoring Global Tax Realities
The White House memorandum further ignores the realities of the global tax landscape. The memo frames DSTs as nothing more than attempt by foreign governments to shake down American technology businesses. In reality, these tax regimes were created because U.S. tech giants have spent years aggressively avoiding taxes in the very countries where they generate revenue.
Major tech firms generate billions in ad revenue, e-commerce sales, and subscription fees across Europe and then shift profits to low-tax havens like Ireland, the Netherlands or Luxembourg. These aren’t technicalities or minor accounting fudges—they represent a strategy to minimize local tax obligations while maximizing profits.
Absent an agreement on a global tax regime, countries have begun to close these loopholes by introducing digital services taxes—requiring companies to pay taxes based on where their revenue is generated, not where their profits happen to wind up. No extortion, just tax fairness.
The memorandum instead frames these policy shifts as attacks on American businesses when, in reality, if Big Tech paid their fair share to begin with, DSTs would have no reason to exist. Foreign states are making the same calculations and policy shifts as US states did when they moved to begin applying sales tax to online retailers that had a physical or economic presence in their state—no extortion, just a necessary response to a glaring tax loophole.
Outlook
If the U.S. follows through on the threats in the White House memorandum and starts slapping tariffs and trade penalties on any country that dares to tax an American tech company—it will be picking a trade fight on behalf of the wealthiest corporations in the world. The economic ills felt by consumers will be purely in service of ensuring the most profitable companies in the world are never held to account.
American consumers will foot the bill for those tariffs in the checkout line—that’s how tariffs work. In addition, countries hit with tariffs will retaliate, which will mean higher costs for American exporters, disrupted supply chains, and a more hostile trade environment. American farmers could face retaliatory tariffs on their exports which make them less competitive abroad, manufacturers could see trade restrictions in these markets, and ultimately consumers will pay higher prices—but Big Tech will sit on billions in profits, largely untaxed.
And I guess that’s the point.
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