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Donald Trump has ordered officials to take retaliatory measures against countries that apply “extraterritorial” taxes to US multinationals, in a move that threatens to trigger a global confrontation between the regimes in taxes.

The US president made the move in an executive order on Monday night, withdrawing US support for a global tax treaty agreed to by OECD last year that allowed other countries to charge top-up taxes on US multinationals.

He added that the “list of options for protective measures” should be drawn up “within 60 days”, putting signatories to the OECD pact – including member states of the EU, the UK, South Korea, Japan and Canada – on notice that Washington intends to stay away. -arriving at the challenges of global tax rules.

Trump clashed with European leaders in his first term as president over proposed digital taxes that would affect major US tech groups such as Google owner Alphabet and Apple, threatening France with a tariff points.

His order on Monday included investigating “whether any foreign countries are not in compliance with any US tax treaty or have any tax rules, or are likely to impose tax rules, that are extraterritorial or disproportionately affects American companies”.

Former UK trade department official Allie Renison, now at consultancy SEC Newgate, said the move showed Trump was expanding his “economic war” beyond tariffs in response to what he saw as in the US discriminatory practices from other countries. “The compliance of their domestic tax regimes behind the hitherto global commitments shows that Trump has been creative in his fight to put ‘America First’,” he said.

“The economic battle net is always widening beyond the tariffs, and as governments begin to consider their response, concerns now turn to what more retaliation might get in the crosshairs — and the inevitable costs that come with it.”

The global deal agreed by the Paris-based OECD in 2021 and the part introduced by several countries last year is expected to raise taxes from the world’s largest multinationals to $192bn a year.

Under “pillar two” of the OECD deal if corporate income is taxed below 15 percent in the country where the multinational is headquartered, signatories can charge top-up taxes. But one part of the interlocking measures, known as the undertaxed profits rule (UTPR), has long drawn Republican attention. ANGERthat the party labeled it as “discrimination“.

Grant Wardell-Johnson, global head of tax policy at accountants KPMG, said US responses could include imposing additional taxes on foreign-owned businesses operating in the US, or restricting of taxes on payments in those jurisdictions.

“Finally we see international taxation moving from a multilateral domain to a bilateral one based on strong unilateral declarations. This is a new world of taxation,” he added.

Alex Cobham, chief executive of the Tax Justice Network, an international campaign group, said Trump’s move effectively left the OECD pact “dead in the water”.

In a two-part memo to the US Treasury secretary, Trump first ordered that the commitments made by the Biden administration in the OECD pact be canceled – a move widely expected – but expanded the scope of the attack.

Cobham said that the potential scope is not only if the OECD pact violates tax treaties, but the extraterritorial potential of all tax rules in all countries.

“If you take this statement at face value, there is every chance that they will come back in 60 days and say that most counties in the world and most OECD member countries should be subject to countermeasures that they discussed,” he said.

A senior EU official said Trump’s billionaire tech entrepreneurs pushed him to move on tariffs rather than trade. “Tariffs talk will be transactional but the real fight will shift to where fortunes are at stake and big tech has interests,” they added.

Mathias Cormann, OECD secretary-general, said: “There are concerns that have been raised with us by US representatives about various aspects of our international tax agreement.”

He added that the organization “will continue to work with the US and all countries at the table to support international cooperation that promotes security, avoidance of double taxation, and protection of tax bases”.