The Trump administration's massive new tariff pronouncements, on top of its pullback from the OECD’s global tax deal, have cast doubt on the future of global tax policy efforts.
The two-pillar OECD-led agreement seeks to create a 15% global minimum tax for large multinational corporations and change the way the companies allocate their profits among countries.
While the US is still taking part in some negotiations, it has rejected key elements of the deal that it says infringe on US tax sovereignty. The administration has especially taken issue with the deal’s undertaxed profits rule, which countries can use to tax companies from other jurisdictions if they aren't paying the minimum tax there. And it has raised objections to countries' imposition of digital services taxes.
On Wednesday, President Trump announced a 90-day pause on higher reciprocal tariffs that hit many US trade partners earlier in the day, and raised duties on China to 125%.
The conflict could spark a reaction away from global tax policy negotiations and toward more bilateral, one-on-one dealings between countries as nations look to retaliate or cut a deal with the US.
On this episode of Talking Tax, reporter Caleb Harshberger talks with PwC global tax policy leader Will Morris and Michael Plowgian, a partner at KPMG and former deputy assistant secretary for international affairs at the Treasury Department. They discuss the current state of negotiations, the complexity of numerous moving parts, and prospects for the US's ongoing role vis à vis the European Union and other nations.
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