Donald Trump has threatened to impose a 100% tariff on goods from any country that taxes digital services provided by American companies, escalating a long-running dispute with Europe and others over how to tax the world’s largest tech firms.
Trump made the threat in a Truth Social post on Friday, singling out European nations he said are considering “imminent” implementation of such taxes. “This TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not,” he wrote.
The European Commission pushed back quickly. Spokesperson Olof Gill called unilateral measures targeting digital services taxes “unjustified,” and said the EU would “respond swiftly and decisively” if Trump followed through. Gill defended the taxes as non-discriminatory, arguing they apply to all large companies regardless of where they are headquartered.
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Digital services taxes are typically structured to fall only on the largest technology platforms. Companies like Meta, Alphabet, and Amazon, all American firms, tend to be the ones caught by such levies, and more than a dozen countries have now enacted them. The U.K. has charged a two per cent tax on revenues earned from British users by search engines, social media platforms, and online marketplaces since 2020.
The timing is particularly fraught given the state of U.S.-EU trade relations. The two sides finalized a deal in May capping most tariffs on EU exports at 15 per cent, with a July 4 deadline to begin implementation. Digital taxes were left out of that agreement entirely and have remained a sticking point.
The legal foundation for carrying out Trump’s threat remains deeply uncertain. His sweeping “reciprocal” tariff regime was struck down by the Supreme Court, which ruled that broad unilateral action of that kind exceeded the authority granted by the International Emergency Economic Powers Act. Trump subsequently signed an executive order rolling out a new global 10% tariff, drawing on a different statute, the Trade Act of 1974’s emergency tariff provision, though any levy created under that authority lapses after 150 days unless Congress acts to extend it.
Trump has a track record of using tariff threats to deter digital taxes. Canada scrapped its own proposed digital services levy shortly before it was set to take effect after Trump threatened to cut off trade talks entirely. Whether European nations follow a similar path remains to be seen.
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