Unlock the White House Watch newsletter for free
Your guide to what Trump’s second term means for Washington, business and the world
Donald Trump has warned he will slap a 100 per cent tariff on imports from European countries that implement a digital services tax on American companies.
The levy would supersede any trade deals between the US and those countries “whether implemented, signed, or not”, Trump said on Friday, marking a new escalation in transatlantic economic tensions.
The US president said “numerous” European countries have been discussing the “imminent implementation” of a digital services tax on US companies, and that some countries were “close” to putting this into practice.
“Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America,” he wrote in a social media post on Friday.
The European parliament recently backed an EU-wide digital services tax, but this would require the support of all 27 member states, which is extremely unlikely.
The EU said it would retaliate if new tariffs were imposed against non-discriminatory taxes. “Unilateral measures targeting such legitimate policies are unjustified. If pursued, the EU will respond swiftly and decisively to defend its rights and regulatory autonomy,” said a European Commission spokesperson.
The OECD has urged governments to co-ordinate their taxation of large tech multinationals. A fragmented approach is “bad for business, it is bad for trade and investment, it is bad for growth”, OECD secretary-general Mathias Cormann told the FT in an interview earlier this month.
A White House official said the US would impose the 100 per cent tariffs based on section 301 of the Trade Act of 1974, which allows the president to retaliate if an investigation determines that taxes are discriminatory acts that restrict commerce.
Earlier this year, the Supreme Court ruled that a number of tariffs imposed by Trump based on emergency economic powers were unconstitutional, and the administration has been searching for other legal ways to keep the president’s protectionist trade policies alive.
Trump used the same section 301 to impose sweeping tariffs on Chinese imports during his first term as president.
Countries including the UK and France have in recent years introduced tech levies, straining relations with Washington, which considers them to be discriminatory against American businesses.
Republican and Democratic administrations in the US have adamantly opposed digital services taxes and the US Trade Representative has several outstanding investigations into the levies.
Trump in April threatened to impose a “big tariff” on the UK if it did not drop its digital services tax, which imposes a 2 per cent levy on the revenue of big tech companies.
In June last year, Canada’s Prime Minister Mark Carney scrapped a digital services tax that targeted companies including Amazon, Meta and Netflix in an effort to smooth trade relations with Washington.
Additional reporting by Andy Bounds in Brussels
