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Ways & Means Republicans Demand Biden Administration Take Decisive Action to Combat Canada’s Digital Services Tax

July 11, 2024

WASHINGTON, D.C. – Canada’s decision to impose a discriminatory digital services tax (DST) on U.S. businesses demands a swift and strong response from the Biden Administration, write Ways and Means Committee Chairman Jason Smith (MO-08) and Trade Subcommittee Chairman Adrian Smith (NE-03) in a letter, signed by every Republican on the Committee, to United States Trade Representative (USTR), Ambassador Katherine Tai. The letter calls on the Biden Administration to utilize authorities under Section 301 of the Trade Act to send a strong response given the threat the DST poses to American workers and businesses:

“Given Canada’s decision to enact its DST on June 19, despite significant U.S. concerns expressed by Congress, USTR, and the Treasury Department, the time has come to make clear to Canada’s political leadership that the United States is done examining options and will act decisively to protect American workers, small businesses, and innovators,” write Ways and Means Republicans. “We support continued engagement with the Government of Canada regarding DST implementation. To date, however, talks have been ineffective and Canada has not changed course at all. We strongly urge you to make clear that unilateral and discriminatory DSTs are unacceptable and immediately initiate an investigation under Section 301. A weak response from the Biden Administration will harm American interests, lead to a proliferation of similar measures, and allow Chinese companies to gain a foothold in the markets of our closest trading partners.”

Republicans on the Ways and Means Committee cite clear precedent for the use of Section 301 to combat DSTs, including actions taken by USTR during the Trump Administration:

“As you know, Section 301 gives USTR ample authority to take action against unreasonable or discriminatory acts that burden or restrict U.S. commerce. In fact, thanks to aggressive action by the prior administration, between 2019 and 2021, USTR investigated the harmful DSTs implemented by other countries, creating a path for USTR to respond quickly in this instance. Without swift action, the United States will not be ready to immediately retaliate when Canada’s discriminatory DST is applied. This is especially concerning because of the potential retroactive application of the DST.”

Read the full letter here.

READ: Smith: Canada’s New Discriminatory Taxes on Americans Deserve Swift Response