Op-ed: Tom Hebert: The United States Trade Representative’s election season stunt
When faced with the choice of standing up for American companies or colluding with foreign governments to undermine American companies, the Biden-Harris administration has consistently chosen the latter.
The United States Trade Representative’s (USTR) new trade dispute with Canada is a pathetic attempt to paper over the Biden-Harris administration’s failure to stand up for American economic interests abroad. If USTR head Katherine Tai were serious about discouraging foreign freeloading on American success, she would not have waited until three months before the November election to respond.
In a Labor Day weekend news dump, Tai announced that she will request a consultation with Canada under the United States-Mexico-Canada Agreement (USMCA) about Canada’s discriminatory digital service tax (DST) against American companies. Canada’s DST will siphon more than $5.3 billion from American companies over five years. At least seven other countries have DSTs that target American companies, draining the U.S. tax base and having a ripple effect on hundreds of thousands of American workers and small businesses.
There is no evidence that the USTR has gotten serious about deterring foreign governments from taxing American companies, as its disgraceful lack of leadership emboldened a Canadian spokesman to say that President Joe Biden “explicitly tolerated” Canada’s DST before it went into effect on Independence Day. If anything, USTR will likely allow Canada to make picayune concessions that would still let them raid American coffers. Tai has a clear incentive to let Canada off the hook by falsely declaring victory because it would allow Kamala Harris to pretend that her administration stands up for American industry on the campaign trail.
The USTR has dropped longstanding bipartisan opposition to foreign DSTs because it dislikes the idea of strong American companies. The Biden-Harris Federal Trade Commission and Department of Justice have sent staff abroad to help Europeans implement the “Digital Markets Act” (DMA), a new law that imposes crippling new regulations and penalties on American companies. The USTR has also dropped longstanding digital trade demands in talks with the World Trade Organization, another surrender.
Foreign governments are pillaging American companies because the Biden-Harris administration is asleep at the switch. In 2022, the EU fined Instagram $506 million, Google $113 million, and Amazon $908 million. Europeans have extracted tens of billions of dollars from American companies from frivolous antitrust lawsuits. DMA fines can reach 10 percent of global revenue, and companies will never be in compliance unless they allow bureaucrats to mutilate their business models to their competitors’ benefit. Just one week after DMA became law, the EU opened new investigations into Apple, Google, and Meta.
Elon Musk’s X has been a favorite whipping boy of European governments, likely because Musk has moved the platform in a free speech direction. In July 2024, the EU laughably accused X of violating the “Digital Services Act” for allowing users to purchase blue checkmarks. In August 2024, EU internal market commissioner Thierry Breton attempted to commit election interference by pressuring Musk to censor his interview with Republican presidential nominee Donald Trump.
Contrast the Biden-Harris administration’s dereliction of duty with Trump’s robust response to attempted foreign looting of American companies. When France attempted to impose a DST on American companies, Trump dialed French President Emmanuel Macron and threatened to slap a 100 percent tariff on French wine and champagne imports. France immediately backed down.
Time and time again, the Biden-Harris administration has remained silent while foreign governments extract tens of billions of dollars from American coffers. Until USTR considers serious measures like Section 301 investigations, Americans should view USTR’s announcement of a trade dispute with Canada as the unserious election year stunt that it is.
Tom Hebert is the Director of Competition and Regulatory Policy at Americans for Tax Reform and executive director of the Open Competition Center.
