US signals retaliation against digital service levies
President Donald Trump has issued a sharp warning to countries that impose taxes or regulations targeting American tech giants, threatening to retaliate with tariffs and export controls. In a Truth Social post, Trump said digital service taxes and related laws are designed to “harm, or discriminate against, American technology.”
The message is a direct challenge to European nations and the UK, where digital levies on companies like Amazon, Apple, Meta, and Google remain in place. Trump highlighted the UK’s 2% digital services tax, which generates about £800 million annually, as one of several policies that unfairly impact U.S. firms while sparing Chinese competitors.
Export restrictions and tariff threats escalate tensions
Trump said that unless these taxes and regulations are reversed, his administration will “impose substantial additional tariffs” and restrict exports of sensitive technologies such as advanced semiconductors. He added: “American technology companies are neither the piggy bank nor the doormat of the world any longer.”
The aggressive rhetoric comes just a week after the U.S. and EU pledged to address unfair trade barriers. However, Brussels emphasized it would not modify existing digital regulations, including the Digital Services Act, which aims to rein in the power of tech giants. Member states like France, Italy, and Spain continue to enforce their own digital service taxes.
UK and Canada in the spotlight
In the UK, reports emerged that Labour leader Keir Starmer had floated the idea of reducing the digital tax rate for U.S. firms in hopes of calming tensions with Trump. Meanwhile, Liberal Democrat leader Ed Davey urged the UK government to resist pressure from Washington. “Tech tycoons like Elon Musk rake in millions off our online data and couldn’t care less about keeping kids safe online. The last thing they need is a tax break,” Davey said.
Canada, facing similar pressure, decided in June to scrap its digital services tax altogether. Trump had previously described the Canadian tax as a “direct and blatant attack” on American interests.
Washington’s broader offensive against global tech rules
Trump’s administration has consistently pushed back on global efforts to regulate or tax American tech companies. In February, he issued an executive order titled Defending American Companies and Innovators from Overseas Extortion, setting the legal groundwork for retaliatory tariffs and sanctions.
With digital services becoming a core battleground in global trade policy, the threat of a new tech-centric trade war is rising. As the 2026 trade pact renegotiation between the U.S., Mexico, and Canada looms, the role of digital regulation in shaping economic diplomacy is only set to grow.
