February 21, 2025 Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties
- Fact Seeker
- Mar 15
- 2 min read
Overview
The memorandum outlines the administration’s policy response to foreign tax and regulatory measures that are perceived as disproportionately targeting U.S. companies, particularly in the technology sector. The document cites concerns over digital services taxes (DSTs) and other regulations imposed by foreign governments, which it argues undermine American economic interests. The administration pledges to counteract these measures through tariffs and other policy tools.
Key Concerns Addressed
Economic Impact on U.S. Companies:
The U.S. digital economy’s gross domestic product (GDP) is larger than the entire economies of many developed nations, including Australia and Canada.
DSTs implemented since 2019 are estimated to cost American companies billions of dollars.
Discriminatory Regulations:
Certain foreign policies require U.S. companies to fund local productions, limit cross-border data flows, and pay additional network usage fees.
Foreign nations impose more burdensome regulations on U.S. digital service providers compared to domestic firms.
Sovereignty and Competitiveness:
The administration contends that these regulations weaken U.S. companies’ global competitiveness, increase operational costs, and expose sensitive data to foreign authorities.
Policy Directives
The memorandum directs U.S. agencies to take actions to counteract these foreign measures, including:
Investigating and Responding to Foreign Digital Taxes:
The USTR is instructed to review DSTs from France, Austria, Italy, Spain, Turkey, and the United Kingdom, which were initially investigated in 2019 and 2020 under Section 301 of the Trade Act of 1974 (19 U.S.C. 2411).
Further investigations may be initiated against other nations implementing DSTs.
Assessing Broader Trade and Regulatory Practices:
The Treasury, Commerce, and USTR departments will jointly examine trade practices that may unfairly impact U.S. firms.
A review will be included in the America First Trade Policy report.
Evaluating the Impact on Free Speech and Content Moderation:
The administration will investigate whether foreign governments’ policies impact how U.S. digital platforms operate regarding content moderation and political engagement.
Addressing Discriminatory Taxation:
Treasury will determine if foreign tax policies violate U.S. tax treaties or create an unfair competitive environment.
The findings will be included in the OECD Global Tax Deal review.
Securing a Moratorium on Customs Duties for Digital Transactions:
The USTR will seek commitments from trading partners to maintain a moratorium on customs duties for electronic transmissions.
Establishing a Business Reporting Process:
A mechanism will be developed to allow U.S. companies to report foreign tax or regulatory practices that disproportionately impact them.
Implementation and Legal Considerations
The memorandum ensures that any actions taken must align with U.S. laws and available budgetary resources.
It clarifies that the memorandum does not create new enforceable legal rights.
The USTR is responsible for publishing the memorandum in the Federal Register.
Conclusion
This memorandum signals a firm stance against foreign policies that the administration views as unfairly targeting U.S. firms. By leveraging trade laws and diplomatic tools, the U.S. government aims to mitigate economic disadvantages and protect domestic companies from what it characterizes as extortive foreign policies.
Writer's Note: Summary made with the use of AI tools for editing and quick processing, facts checked against the order before publishing.
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