The world cannot afford a tariff war to protect digital sector, which has low-tax operations The United States announced and then immediately suspended a whopping 25% tariff rate on over $2 billion of imports from six countries including India, signalling Washington’s intent to act punitively on its long-held grouse with these nations for their digital services taxes primarily impacting Silicon Valley tech giants. The office of the U.S. Trade Representative (USTR) Katherine Tai said that the tariff proposed on goods from Austria, India, Italy, Spain, Turkey, and the U.K. was approved following a “Section 301” investigation that found these digital taxes to be discriminatory. With the threat of tariffs hanging over these six economies when most of them are limping through a feeble post-COVID-19 recovery, the USTR appeared to project a softening of the blow by adding that the tariffs would be suspended pending ongoing tax negotiations to “provide time for those negotiations to continue to make progress while maintaining the option of imposing tariffs under Section 301 if warranted in the future”. The backstory is that the investigation was initiated by the Trump administration in June 2020, and the deadline for approving tariff action based on the investigation would have lapsed this week. The latest policy action comes a few months after the Biden administration similarly approved, then suspended, tariffs on France retaliating for its tax impacting firms such as Alphabet, Amazon, Apple, Facebook and Microsoft.