President-elect Joe Biden is about to inherit a trade dispute that gives him an early chance to show whether he is prepared to break not just with Donald Trump, but with the corporate-friendly trade policies championed by his Democratic predecessors. The outgoing administration is set to impose new tariffs over France’s recent decision to tax the revenue of U.S. digital giants like Facebook, Apple and Google, charging that the move discriminates against U.S. companies.
For Trump, the fight is a simple matter of protecting the profits of rich American companies against what he sees as a European cash grab. Barack Obama and Bill Clinton both would likely have come down on the same side; each president had a long history of championing the interests of Silicon Valley. Biden should go in a different direction. He should drop the tariffs and work with France and other allies to find cooperative solutions to the huge and growing problem of ensuring that modern corporations start paying their fair share of taxes to sustain the societies that allow them to earn such enormous profits.
The issue is both straightforward and immensely complicated. The digital economy has outrun the ability of governments to tax it successfully. With digital companies reaping a windfall from the coronavirus pandemic, they are padding their profits and further leaping ahead of traditional brick-and-mortar firms. Finding new ways to tax those companies is an urgent global priority.