Lawyers for the EU and other trading partners have begun laying the groundwork for a legal challenge to a US border tax proposal that could trigger the biggest case in World Trade Organisation history.
The preliminary moves come as Republicans in Congress work to convince president Donald Trump to back a shake-up of the US corporate tax system that would include a “border adjustment” system. It would see US imports subject to tax and export revenues exempted.
If the US were to adopt the mechanism it would represent the biggest shake-up in the global corporate tax system for almost a century, according to tax experts. Members of the WTO and trade experts warn that it would lead to a major challenge to the global trading system at a time when its most influential member is already tilting toward protectionism under Mr Trump.