e-METASTASIS and the TRADE WAR
- William Paton
- 6 days ago
- 8 min read
Updated: 3 days ago
With Its Internet Oligopoly, the USA Runs an Overall Trade Surplus With the World, Not a Deficit
Beijing，29 May 2025
Summary
US firms dominate global e-commerce and services, earning gigantic profits and avoiding fair taxation. The US actually runs a trade surplus with the world—not a deficit—by 'off-shoring' sales of services just as it off-shored manufacturing. The author calls for global cooperation to tax companies' online revenue, thereby restoring balance in trade negotiations.
IN February, I pledged to deactivate my Facebook and LinkedIn accounts for 2025, and to reduce my purchases of American goods and services, in protest at Trump's tariff blitz. Little did I realize just how tightly U.S. internet companies had wrapped their tendrils around me.
De-activating Facebook and LinkedIn was not difficult. Unfortunately, I get less news of former colleagues, but others have reached out bilaterally. More difficult was to confront the massive penetration of so many U.S. companies into my other digital life. For instance, while 'Alphabet's' Google is not as good at searches as DeepSeek or Tongyi's AI, it is my login for countless accounts and G-mail my retrieval email address for many others. Google's Android runs my phone and tablet, while Google Play controls my non-Chinese apps. Like a metastised tumour, it is inoperable.
Microsoft has sold me new accounts for installing Windows and Office on every new desktop or laptop for 32 years, and are now trying to rent me that same Office software! They sell me Dropbox every year, too, while Adobe ceaselessly tries to hook me on high monthly fees merely to use PDFs.
Amazon sells me books on Kindle and Audible, and toys delivered to our grandson. Amazon Prime Video supplies some of my film fix (I watched better-quality films in the 1970s at repertory cinemas than I do today). Then there is the mammoth Netflix (U.S.), with its avalanche of series productions. For communications there is Whats App (U.S.), Zoom (U.S.) and Microsoft's Teams.
US Share of Global e-Commerce
US tech companies dominate the world's 50 biggest companies (see graphic below). Even China's (light and dark orange), are small by comparison and Europe's (most of the green plus the two yellow), are even smaller. Only Saudi Aramco stands out as a true giant (more than $1T), outside the USA. How does this compare with President Trump's cries of anger that the world is "ripping off the USA" by not buying enough of it's exports?
The Trump administration's sole emphasis on the U.S. deficit in trade in goods, ignoring services, is a colossal lie about its actual position in the global economy. The USA not only runs a massive surplus in services with the world, more than half of the sales of its services worldwide are not reported as "exports"—because the company uses foreign subsidiaries. Avoiding taxation this way also avoids being counted as an "export." U.S. retail chains, for instance, are everywhere, owned by their foreign subsidiaries. There are 6,500 Starbucks and 5,900 McDonald's in China whose profits flow back to the USA. Most of this profit is not taxed nor counted as exports, but is rather classified as 'dividends'.
The U.S. trade surplus in services is thus around $1.5T. After deducting its deficit in goods of $870B last year, it still had a very large net trade surplus, globally, of around $600B, and most certainly not a deficit. |
While reported U.S. exports of services in 2024 were $1.05T, additional services sold via foreign subsidiaries are estimated to have been worth another $1.4–1.7T,(1) for a total of $2.45 to 2.75T in U.S. sales of services outside the USA. Official imports of services were $720B. Even if other countries' actual sales of services to the USA were somehow double the amount reported (highly unlikely), the total would be $1.44T, compared to that $2.45 to 2.75T. The USA's de facto trade surplus in services would then still be a minimum of $1T. However, unlike in the U.S., in other countries the majority of foreign services sold are reported as exports. The U.S. trade surplus in services is thus around $1.5T. After deducting its deficit in goods of $870B last year, it still had a very large net trade surplus, globally, of around $600B, and most certainly not a deficit.
The world is also running a bigger and bigger moral deficit with the U.S.. We grapple with this astonishing lie that the USA is a huge loser in the world economy. We suffer brazen bullying, wanton disregard for law and treaties, some very recently signed, and now, insistence that the USA has some sort of planetary eminent domain, able to annex territory when it "needs to." The USA's four percent of our planet's population—still enjoying over 1/4 of the entire planet's nominal GDP and 1/3 of its total wealth—are led today by a President on the warpath. Why? Because he wants more! And he figures he can just strong-arm the entire world into giving it to him.
E-commerce today is unlike any previous form of commerce. Yanis Varoufakis argues that "techno-feudalism" describes an economic system where tech oligarchs like Amazon and Google act as feudal lords, extracting wealth through digital platforms and data monopolies while reducing users and workers to vassals dependent on their digital platforms, analogous to land in feudal times.
"Big tech has replaced capitalism's twin pillars—markets and profit—with its platforms and rents. With every click and scroll, we labor like serfs to increase its power." Technofeudalism: What Killed Capitalism, by Yanis Varoufakis,2024.
Ironically, Yanis' book was published on Amazon. No doubt he felt he had little choice, the same conclusion I have come to regarding my forthcoming first novel.
U.S. companies are increasingly selling internet access from space. Originally this was companies like Iridium (U.S.), and Inmarsat (then UK but since bought by Viasat which is partly U.S.). Now it is Hughesnet (U.S.), Starlink (U.S.), and the latest—Smart WiFi (U.S.)). This orbiting spider's web has already begun to replace conventional WiFi and mobile telephony. Only China has its own setup. We face the prospect of near-global provision of broadband internet access by just a few enormous U.S. companies, who have the power to selectively cut it off.
In China, where Google largely doesn't operate (but Apple and Microsoft do), the same phenomenon exists. Online shopping is dominated by Alibaba, searches by Baidu, communications by WeChat, e-payment by WeChat and Alibaba, and ride hailing by Didi. These companies still operate mostly inside China where they pay hefty taxes, and are only slowly expanding in such places as South-East Asia. Nor is the USA about to allow Chinese tech companies into the USA or their allies' economies to do what they themselves do. Witness the US hostility to Huawei and TikTok, in fact to any serious competitor.
Taxation: A Good 'Card' to Play in Trump's Trade War Poker Game
Alphabet's gross profit for the twelve months ending March 31, 2025 was $211B. Revenue was $360B (Alphabet is wildly profitable.) It paid income taxes of about 9% globally in 2024 and 6% in 2023, almost all of it in the USA though more than half of its business was abroad. Its profits are rising steadily at 16-17% per year. A $2T dollar company, it pays taxes at a lower rate than a local family-run restaurant in a Western country. Google, although it earned over half of its 2024 income abroad (54% or $194B), paid only 1.4% foreign tax in the countries where it earned that income. See Google's SEC filing. Microsoft, the world's most valuable company, worth $3.2T at present and making money from me as I type, paid an "effective tax rate" for the fiscal years ending June 2020 to 2024 that averaged 16.1%. It paid more taxes abroad than Google but still slipped oodles of cash through loopholes the size of Killer Whales. For instance, Microsoft Ireland (covering Europe), reported €37B in revenue in 2024 but paid corporate tax of less than 1%. Shortly after his new term began, Trump insisted U.S. companies—including tech monopolies selling services we can no longer avoid buying—must not be taxed in other countries. By threatening to double U.S. taxes on companies from any country taxing U.S. companies, he made it hilariously clear the USA itself taxes foreign companies and plans to go on doing so.
Despite such blatant hypocrisy, Trump's daily shouts dominate the global news cycle with his accusations of gross unfairness towards the USA. However, the real global trade issue is not goods; it is services, especially the still-growing US online hegemony and its resulting huge trade surplus with the world.
Countries need to show some spine and come together to impose real rates of taxation on the U.S. corporations dominating their online economies and extracting those surpluses. The E.U., at least, seems to be edging closer to doing this.
Rather than fussing with complex determination of profit and location—a loser's game against battalions of US lawyers—countries should simply agree to tax companies for all online revenue earned in their countries at a standard rate of—say—15% (and yes, TikTok too). This automatic company tax could then be deducted from any income tax due to be paid in-country by that company. If Trump gets annoyed, they could raise the bar to—hmm—how about 30%? Perhaps, just for an initial 180 days? Trade negotiations could then re-start from there. :) ———————————————
1) Altogether in 2024, U.S. multinational corporations sold an estimated $1.4–1.7 trillion in services through foreign subsidiaries that were not counted as U.S. exports, dwarfing the official U.S. services export figure of $1.05 trillion. This is data that is not generally available and must be sourced from each individual company report or in some cases, the WTO. That $1.4-1.7T included such transactions as generated by foreign subsidiaries of U.S. firms (e.g., Microsoft Ireland selling Azure licenses to EU clients, or Goldman Sachs UK advising European mergers.) Other exports were excluded from export stats because transactions occur locally (e.g., a Starbucks in Tokyo serving coffee isn’t a U.S. export, even though profits flow back to Seattle). The U.S. services sector is 60–70% larger than officially reported when including offshore subsidiary sales. The U.S. sells a variety of services abroad that are not categorized as "exports" in U.S. trade statistics. U.S. e-commerce annual revenue from abroad which is often not reported as exports, includes: 1. Online Retail Sales to Foreign Consumers (Amazon, eBay, Walmart, Etsy, Shopify), $120–$150B; for example, Amazon’s international sales (excluding North America) were $131 billion in 2023; 2. Digital Services & Subscriptions (Netflix, Disney+, Apple (App Store, iCloud), Microsoft (Azure, Office 365), Meta (ads), $80–$100B; 3. B2B e-commerce (wholesale & platform fees), $50–$70B; billion annually; 4. digital advertising (U.S. platforms selling ads to foreign businesses, Google, Meta (Facebook, Instagram), X (Twitter), $60–$80B. Google’s ad revenue was $237 billion globally in 2023, ~50%+ from outside the U.S.), Meta’s ad revenue was $132 billion in 2023, with ~60% from international markets. These are just the largest parts. There are so many others, such as online travel and booking services, Airbnb, and so on.
In addition to the e-commerce sector, there is also large volumes of sales of intellectual property, financial services, telecommunications services and many other cross-border transactions. For instance, foreign profits paid to U.S. parent corporations as dividends are generally excluded from U.S. taxation and are not counted as exports. Additionally, foreign earnings retained overseas are usually not treated as exports. Other types of foreign income such as “Subpart F income” or “Global Intangible Low-Taxed Income” are also often not counted as exports. Exact quantitative shares are extremely difficult to total up.
Some of the largest categories of U.S. service revenue from abroad, other than e-commerce, that is often not labeled an export, includes, annually: Royalties and license fees such as for pharmaceuticals and entertainment, ~$130–$150B; banking, insurance, and asset management, ~$80–$100B; telecommunications, computer and information services, ~$70–$90B; consulting, legal services, accounting and R&D, ~$60–$80B; tuition paid by foreign students, ~$40–$50B; shipping and air freight abroad, ~$30–$40B; streaming, film/TV licensing and video games ((e.g., Netflix, Disney, HBO), ~$25–$35B; healthcare and pharma services abroad, ~$15–$25B; infrastructure projects abroad, ~$10–$20B.
Sources: Most of this information was extracted using Deep Seek from WTO reports and company accounts. If you would like more details ask Deep Seek the question: What amount of the sales of U.S. services outside the USA are not counted as exports? Or use another AI if you prefer.
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