French Finance Minister Bruno Le Maire said after meeting Mnuchin in Davos that Paris would hold back on enforcing the tax until the end of the year, while the USA would defer its planned sanctions. "That is a huge priority for us". Jaguar Land Rover plans to cut thousands of jobs, Honda plans to close its only United Kingdom plant in 2021, and Nissan has given up plans to build its largest SUV model in Sunderland.
It comes after France agreed to delay their plans to introduce a digital tax on big tech firms like Google and Facebook, after Washington threatened to retaliate with a levy on French cheese and champagne sectors.
The US threatened it would consider retaliatory tariffs on United Kingdom auto makers if the measure goes ahead.
"At the same time we want a deep and comprehensive free trade agreement and that's what we are working on", he added, in comments reported by The Telegraph.
"We plan to go ahead with our digital services tax in April", he told a panel discussion in Davos.
The disagreement over tax comes as Britain is preparing to negotiate new trade agreements after it leaves the European Union.
"It will be a very courageous British government that walks into a trade war with the United States at the very moment when centrepiece of its economic policy is to strike a trade deal with the United States", he told the Today Programme.
Speaking ahead of a meeting with European finance ministers in Brussels on Tuesday, Mr Javid said: "We have been very clear that as we leave the EU, we will not be in the single market, we will not be in the customs union".
While France has taken the lead on pushing for change in taxing digital business, other countries are also considering similar measures, including Austria, Italy, Spain and Britain.
But trade officials in Washington say USA firms are being unfairly targeted.
Several European nations are considering taxes on search engines, social media platforms and online marketplaces to compensate for lost revenues, drawing the ire of the United States which claims that such a tax unfairly targets USA firms.
The Organisation for Economic Cooperation and Development (OECD), which is overseeing efforts to find a joint solution, has urged national governments to wait for a multilateral agreement.
OECD secretary general Angel Gurria told the BBC that without a global solution to technology companies paying less than a fair share of tax, there would be a "cacophony and a mess" of 40 countries going their own way with "tensions rising all over the place".
Earlier, US President Donald Trump threatened to slap heavy tariffs on European-made vehicles if ongoing talks on a proposed European digital tax initiative yield no progress, citing the EU's alleged attempts to "take advantage" of the US on trade "for many years".
The US Senate this month voted to approve a new trade agreement linking the United States, Canada and Mexico.