[CTC] Bessent: Digital taxes are ‘centerpiece’ of U.S. trade negotiations

[Arthur Stamoulis]

*Inside U.S. Trade*

*Bessent: Digital taxes are ‘centerpiece’ of U.S. trade negotiations*

By Brett Fortnam | June 11, 2025



The U.S. is prioritizing pushing back against foreign digital services
taxes as part of its trade negotiations, Treasury Secretary Scott Bessent
told the House Ways & Means Committee on Wednesday.



“It is a centerpiece of our tariff negotiations,” Bessent said when asked
for an update on U.S. talks with partners on digital services taxes. “When
I talk about what we are pushing back on, we are pushing back on tariffs,
non-tariff measures, currency manipulation, government subsidies and unfair
taxation and fines.”



Rep. Ron Estes (R-KS) raised the issue with Bessent while advocating for a
provision he helped author in section 899 of the Republican tax bill --
referred to as the “One Big Beautiful Bill” -- that would allow the
administration to *take action against foreign governments*
<https://insidetrade.com/node/183273> or residents or companies in
countries that have “unfair foreign taxes.”



Bessent threw his support behind the provision, which targets digital
services taxes and was passed by the House last month as part of the tax
bill. But whether the Senate will try to strip or modify the provision
remains unclear as asset managers are calling on the upper chamber to
change the language.



“It is entirely understandable and correct for Congress to write laws that
protect U.S. business interests overseas,” the Investment Company Institute
said in a statement last month. The group represents the asset management
industry.



“Section 899, however, is currently written in a manner that could limit
foreign investment to the U.S. -- a key driver of growth in American
capital markets that ultimately benefits American families saving for their
futures,” ICI continued. “We encourage the Senate to make this provision
more targeted to respond to unfair foreign taxes and other concerning
measures rather than disincentivizing beneficial foreign investment in the
U.S.”



Bessent claimed that much of the pushback against section 899 is mostly
coming from foreign companies. “I believe that there is quite a bit of
misinformation on 899,” he said. “Much of the pushback is coming from
overseas companies and overseas companies are worried that their countries
may try to usurp U.S. authority.



That concern, Bessent argued, is misplaced. Rather than opposing U.S.
retaliation, those companies should be pushing foreign governments to lift
digital services taxes, he said.



“So if a European country tried to unfairly tax a U.S. company or take
money away from the U.S. Treasury, then it would fall perhaps on that
[corporation],” Bessent said. “They should look to their own capitals. This
is a fiscal bill, not a revenge bill.”



Rep. Brad Schneider (D-IL) disagreed with Bessent’s assertion, calling
section 899 a “revenge tax.”



“Major investors and employers agree that if this revenge tax is
implemented, employers will pull back on investment in operation in the
U.S.,” Schneider asserted. “Indeed, the Joint Committee on Taxation’s
revenue estimate confirms this; later in the budget window the provision
begins to lose revenue.”



The JCT’s *June 2 revenue projection*
<https://www.jct.gov/publications/2025/jcx-26-25r/> estimates that section
899 would increase revenues through 2032, but lose revenue in 2033 and 2034.



In addition to foreign digital services taxes, the administration is also
prioritizing in trade negotiations securing agricultural purchase
commitments, Bessent said. “We are constantly pushing to open other markets
that have high non-tariff barriers, or sometimes tariff barriers on
American agriculture products with and we are pushing substantial purchase
agreements for American farmers,” he said.



*China update*

Bessent returned early Wednesday from London where he took part in
negotiations with China that he said could lead to the rebalancing of the
U.S.-China economic relationship. China, he said, “needs to be a reliable
partner in trade negotiations,” and added, “If China will course correct --
and I believe after our talks in London, they will -- then the rebalancing
of the world’s two largest economies is possible.”



The U.S. and China “are in the midst of constructing” a trade deal, Bessent
said. The agreement the U.S. and China struck this week “was for a specific
goal and it will be a much longer process,” he added.



President Trump on Wednesday morning *posted on social media*
<https://truthsocial.com/@realDonaldTrump/posts/114664632971715644> that
“Our deal with China is done, subject to final approval with President Xi
and me.” The deal, per Trump, *secured U.S. access to Chinese rare earths*
<https://insidetrade.com/node/183430>. -- *Brett Fortnam* (
*bfortnam at iwpnews.com* <bfortnam at iwpnews.com>)
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