In recent weeks, the Trump administration has issued a series of White House memoranda targeted at curbing foreign extraterritorial and discriminatory taxes, particularly UTPRs and digital services taxes (DSTs). The memoranda direct the Department of Treasury and other agencies to identify countries imposing such taxes and present tax and other countermeasures for consideration. 

The most recent memoranda, Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties (Defending American Companies Memo) and the America First Investment Policy, each issued on February 21, 2025, build on earlier memoranda. The Defending American Companies Memo highlights DSTs and directs Treasury to determine whether these taxes are discriminatory against U.S. companies and, if so, to recommend countermeasures, including the invocation of section 891. Section 891, which has been in U.S. law for many decades but has never been invoked, allows the president to double certain U.S. tax rates of persons resident in a foreign country if the president finds that U.S. persons are subject to discriminatory or extraterritorial taxes under the laws of that foreign country. The America First Investment Policy is more narrowly focused on China and directs Treasury and other agencies to consider whether to suspend or terminate the U.S.-China income tax treaty. Prior memoranda included Reciprocal Trade and Tariffs, issued on February 13, and the America First Trade Policy and Organization for Economic Co-operation and Development (OECD) Global Tax Deal, each issued on January 20. Treasury reports pursuant to these White House memoranda are due on March 21 and April 1. 

The policies underlying the White House memoranda – to encourage foreign countries to eliminate extraterritorial and discriminatory taxes on U.S. persons – are aligned with the Defending American Jobs and Investment Act (H.R. 591), a bill introduced by Jason Smith (R-MO), Chairman of the House Committee on Ways and Means, in January. In addition to contemplating tax countermeasures, the White House memoranda provide that tariffs or other trade countermeasures may be considered to counteract foreign extraterritorial or discriminatory taxes (as well as foreign trade practices). The policy environment remains fluid and bears monitoring by foreign persons with operations and investments in the U.S.

For more information, please contact:

Layla J. Asali, lasali@milchev.com, 202-626-5866

Rocco V. Femia, rfemia@milchev.com, 202-626-5823

Candice C. James, cjames@milchev.com, 202-626-5810

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