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7th Jul 2022

US 'yet to consider' EU worries on Trump tax reform

  • Wall Street. The EU says that the US tax reform could hit European finance industry (Photo: Dan Nguyen @ New York City)

Donald Trump's sweeping tax reform, which the EU said could "seriously" damage economic relations with the US, will take time to be implemented, a top US official said on Wednesday (10 January), with the Trump administration not yet at the point of addressing EU concerns on the issue.

"There's a lot of implementation to be done in terms of regulation, in terms of interpretation," US Treasury undersecretary David Malpass told a group of journalists during a visit to Brussels.

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He said that the US administration was "reviewing" the tax reform that was adopted by the Congress last month and signed by president Trump on 22 December.

The law included tax cuts for individuals and companies, amounting to some $1,450 billion (€1,200bn) over the next decade.

"There are still quite a few steps from the signing of the law to the implementation of the law," he said, adding that the administration was "not at a point yet of addressing the specific questions that the European Commission has raised".

Last month, while the tax bill was still being discussed in Congress, four EU commissioners sent a letter to US Treasury secretary Steven Mnuchin.

They said that the bill "as it currently stands contains elements that risk seriously hampering trade and investment flows between our two economies".

They added that it "may also lead to unfair trade practices or discrimination that would appear to be incompatible with WTO rules and other international commitments taken by the US".

The commissioners' letter followed another one, also sent to Mnuchin, voicing the concerns of the five biggest EU countries - Germany, France, the UK, Italy and Spain

According to the EU, the US reform would result in a double taxation for EU companies, notably in the finance industry. Measures on intellectual property could also "result in an export subsidy" for US companies.

A commission spokeswoman told EUobserver on Wednesday that it was "too early" to say what action the EU executive could take following the reform's adoption by the Congress.

"We have to analyse the law and this will take time," the spokeswoman said.

Malpass, who was an economic adviser to Donald Trump during his presidential campaign, said he was in Brussels for an "informational" trip.

He said that the Trump administration was "very interested in having a bilateral relationship with the EU".

He insisted that "the idea that the US is inward focused isn't really the right characterisation of the US".

Malpass met EU officials, including Brexit negotiator Michel Barnier, while in Brussels.


He pointed out that the US had "substantial interaction" with financial markets in the UK and in the rest of the EU.

And he said that the Trump administration wanted a "constructive outcome" to the Brexit negotiations in order to ensure growth in Europe.

"That would be the best outcome for the US," he said, adding that Washington also expected a "recognition" of the interest of US companies and workers "that are heavily engaged in Europe".

'Strong remarks' in Davos

Asked whether the US would try to conclude a deal on services, including financial services, with the UK, Malpass said that the US was "interested in bilateral trade and services deals with various countries" like Japan and the UK.

He said however that it was "really early to think about it" because the UK was still in the EU.

The EU has so far ruled out that financial services are part of a deal on the future EU-UK relationship.

"In the meantime we want to be a strong economy, a good partner for both the EU and the UK," he said.

Trump will be in Europe later this month, to participate in the World Economic Forum in Davos, Switzerland.

According to Malpass, the US president will make "strong remarks favouring US workers, explaining how his presidency is characterised by putting American interests first … but also the importance of being engaged in world affairs."

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