The US has thrown into disarray plans for a new global tax framework for technology companies after suspending talks with European countries — and warning them of retaliatory measures if they press ahead with their own taxes.

In a letter to four European finance ministers seen by the Financial Times, US Treasury secretary Steven Mnuchin warned that discussions had reached an “impasse”. He said the US was unable to agree even on an interim basis changes to global taxation law that would affect leading US digital companies. 

The move dashes international discussions under the auspices of the Paris-based OECD for a more equitable approach to taxing multinational companies. It will also infuriate European capitals desperate to raise revenue after the devastation to public finances wrought by the Covid-19 pandemic.