President Donald Trump has revived a transatlantic trade fight by threatening a 100% tariff on imports from any country that introduces a digital services tax on US technology firms, in a move that landed just after European Union members had completed ratification of a long-negotiated trade deal with Washington.
In a post on Truth Social, Trump said several European countries were close to bringing in such levies and warned that any country proceeding would be hit with duties ...
Continue Reading This Article
Enjoy this article as well as all of our content, including reports, news, tips and more.
By registering or signing into your SRM Today account, you agree to SRM Today's Terms of Use and consent to the processing of your personal information as described in our Privacy Policy.
on all goods entering the United States. He also claimed the measure would override existing trade agreements, whether they were already in force, signed but not yet implemented, or still pending.
The European Commission pushed back quickly. Spokesman Olof Gill said unilateral measures aimed at what Brussels considers legitimate policy choices were unjustified, adding that the EU would defend its rights and regulatory independence if needed. The Commission has long argued that digital services taxes are not targeted at individual nationalities but are applied across the board to large companies operating in a market.
The dispute goes to the heart of how governments tax the digital economy. Digital services taxes are generally based on revenue, not profit, and are designed to capture income earned in a country by large online businesses that may have little or no physical presence there. They have become a familiar flashpoint in Europe, where policymakers say multinational technology groups can generate substantial sales without contributing fairly to local public finances.
Nine EU states already have some form of digital services tax in place, while the UK, Switzerland and Turkey have adopted similar regimes. Other European countries have explored the idea, and the issue has been kept alive by the failure of a global solution at the OECD. Many governments had treated their own taxes as temporary stand-ins for a multilateral deal, but that route weakened after the United States withdrew from the talks in January 2025.
That withdrawal has made the present confrontation more complicated. European governments that had been waiting for an international compromise now have less reason to hold back, and Brussels has also resumed discussion of an EU-wide digital levy that could help fund the bloc’s long-term budget and repay pandemic-era borrowing.
Trump’s threat is therefore aimed at a problem that has, in part, been shaped by his own administration’s decisions.
There is also a serious legal question over whether the White House could carry out the president’s warning in the form he described. The Supreme Court’s February 2026 ruling in Learning Resources, Inc. v. Trump curbed the use of the International Emergency Economic Powers Act for tariff-making, while the administration’s current fallback under Section 122 of the Trade Act of 1974 is capped at 15% and expires on 24 July 2026. The remaining avenue, Section 301, allows retaliation against discriminatory foreign trade practices, but it requires a formal investigation, public submissions, hearings and consultations before tariffs can be imposed.
The administration has previously used Section 301 against digital taxes. In Trump’s first term, the US Trade Representative investigated measures in France and a range of other countries, concluding that several were actionable under US trade law. Retaliatory tariffs were announced but suspended while wider OECD talks continued.
This time, the timing is especially awkward. On Thursday, EU member states gave final approval to the transatlantic trade agreement reached politically last year, a deal that caps most tariffs on European exports to the US at 15% and was meant to stabilise a trade relationship battered by months of uncertainty. Digital services taxes were left outside the agreement, however, leaving the issue unresolved even as the broader pact moved forward.
That exclusion matters. Trump’s new warning appears designed to go beyond the framework just approved, and the EU has a suspension clause it could use if Washington is seen to breach the deal. A full-scale tariff response would place pressure on sectors ranging from German cars to French luxury goods and Italian manufacturing, while also risking fresh retaliation from Brussels.
For US tech companies, by contrast, the stakes are primarily fiscal. Any broader European levy would fall disproportionately on the biggest American groups, including Meta, Alphabet, Amazon and Apple, which earn significant revenue in Europe while often paying tax in lower-rate jurisdictions rather than where users are located.
For now, the threat remains just that: a threat. But it comes at a moment when the legal tools available to Trump are narrower than they were a year ago, the tariff authority now in use is nearing expiry, and the trade truce with Europe is barely dry.
Source: Noah Wire Services
