According to the Journal, in October 2019, there appeared to be progress toward a deal that would give more taxing power to countries in which consumers are based, rather than where patents, licenses and brands are owned or where businesses have headquarters. That arrangement would benefit countries with large consumer markets but no major technology companies, such as France and Italy. But because it would affect not just tech firms, but all large, consumer-oriented companies, U.S. companies began to raise concerns with the Treasury department.

In response to those complaints, Mnuchin last month sent a letter to the OECD, in which he mentioned these concerns about the emerging agreement. As an alternative, he proposed a system whereby companies could choose whether to operate under new OECD-brokered rules or to stick with the current system.

That was not acceptable to some European countries. Without a change to the tax rules, many European governments face the prospect of steadily eroding corporate tax revenues. They rely on these revenues to a significant extent to fund state-run health, education and welfare programs that are larger than those in the United States. The U.S. position against new digital taxes could leave these governments with the unpalatable options of cutting those programs or participating in a trade war.

​The U.K. government on Jan. 21, said that it plans to go ahead with its digital services tax in April. A representative of the U.K.’s Treasury said, “We are fully engaged in international discussions to address the challenges digitalization poses for tax. Our strong preference is for an appropriate global solution. It will be repealed once a global solution is in place.”

Italy’s government declined to comment to the Journal.