Are tax wars the new trade wars? | DW News (youtube.com) DW
Trump has basically pulled the US out of the ‘global corporate tax deal’ initiated under Biden (the idea was to charge minimum 15% tax everywhere, so no company would want to shift profits to pay less taxes, increasing tax revenue for governments everywhere by hundreds of billions, since multinationals can sometimes get 0%, but they had been finding creative ways to get money back in other forms from governments, reducing their real money outflows). 120 countries had signed up in principle in 2021, but a smaller number had actually really joined it.
Trump said that not only was he not going to do this, he didn't want to do it, and no other country could do it to US companies. They were going to look at the tax rules of all other countries. If you make US companies pay taxes in the countries where they're doing business and employing people, US is going to come after you. Other countries will have to make a decision.
Now there will be higher uncertainty for businesses, because they might have to pay different taxes in two countries (or more) and pay taxes for different things in the various countries.
Because US is threatening high tariffs already against allies, there's less disincentive for those other countries to do things that US wouldn't like, since they have already undertaken such strong steps and there's less they can do. If they've already started a trade war with you, what, are they going to start another trade war with you? Canada and Mexico are already talking about what retaliatory measures it can undertake against the US. ... This might be a strong motivation for other countries excluding the US to band together and make trade deals.
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‘There is no American production. There’s North American production.' Krugman, who also noted that 30 years of business relationships will now be disrupted. Krugman couldn't see any reason for protectionist policies against Canada, because there wasn't a huge number of immigrants crossing from there. Mexico has a fentinol thing, but they will say it's hard to overcome US demand.