Mexico Will Gain If US Punished Countries Imposing Digital Service Tax

Mexico would benefit greatly if the United States imposed tariffs on goods imported from six countries, including India and Britain, in retaliation for their digital service taxes.

Mexican goods exports to the US will increase severalfold, as a result, says an analysis by international trade consultancy Ansley, which claims to have played a pivotal role in USMCA, the free trade agreement between the United States, Mexico, and Canada.

Among the countries that the US wants to punish include Austria, Britain, India, Italy, Spain, and Turkey.

Britain, for example, exports a large amount of cosmetics to the United States. Higher tariffs will make British cosmetics expensive for American consumers, forcing the North American country to import cheaper alternatives from Mexico.

The consultancy says Mexico has long been exporting such goods and the imposition of tariffs would open up a new market for the country.

The analysis comes a month after US trade representative Katherine Tai recommended the White House that it punish the six countries for taxing American internet firms, including Google, Facebook, and Amazon.

President Joe Biden has not acted on the recommendation. Reports say Biden would pursue a global agreement on digital service taxes through the Organisation of Economic Cooperation and Development (OECD), instead of imposing tariffs.