On Friday, President Donald Trump issued a stern warning, threatening to impose a 100% tariff on imports from any nation that introduces a tax on digital services impacting U.S. companies.
Through a social media post, Trump directed his criticism towards European countries that he claimed are on the verge of implementing such taxes. Historically, Trump has leveraged tariffs to counter these taxes, yet many countries are increasingly seeking new revenue streams as their economies shift toward the digital sector, a domain largely dominated by American firms.
“To any country that enacts this tax, please consider this as a formal notification: they will face a 100% TARIFF on all goods sent to the United States,” Trump declared.
The president also stated that this new tax measure would override any existing trade agreements. While asserting that the penalty would apply universally, he specifically pinpointed European countries in his message.
This development raises the possibility of escalating tensions, which might not only drive prices up but also stifle economic growth. If the European Union, consisting of 27 member countries, chooses to retaliate, it could potentially trigger a broader trade dispute.
“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 Olof Gill, a spokesperson for the European Commission on Friday.
He defended taxation on technology companies as “non-discriminatory” and applied equally to “all large companies, regardless of their origin.”
Trump has repeatedly pushed against foreign efforts to tax or regulate American tech giants. Last year, he threatened new tariffs on any country that moved to do so. A post from last August said that digital taxes and regulation “are all designed to harm, or discriminate against, American Technology.”
The threat comes ahead of Trump’s July 4 deadline for the European Union and the United States to start implementing a tariff deal that caps tariffs on most EU exports at 15%.
The European Union in May finalized a trade deal with the United States that caps most tariffs on EU exports at 15%. The deal followed months of debate within the EU after European Commission chief Ursula von der Leyen tentatively struck the deal last year while visiting Trump’s golf course in Scotland.
Digital taxes were not part of the agreement and have remained a sticking point between the U.S. and the European bloc.
The U.S. government has previously conducted tariff investigations into digital services taxes under Section 301 of the Trade Act of 1974. But it was unclear how Trump would carry out his threat and whether he would apply the tariffs broadly or initially target certain nations.
Britain, which is no longer part of the EU, has since 2020 levied a 2% digital services tax on revenues earned by search engines, social media sites and online marketplaces that “derive value” from U.K. users.
The British government said in a policy document at the time that corporate tax rules for digital businesses had “led to a misalignment between the place where profits are taxed and the place where value is created.”
The U.K. tax includes thresholds, so mainly large international companies will pay it. The tax was designed to “ensure the large multinational businesses in-scope make a fair contribution to supporting vital public services,” the document said.
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AP reporters Sam McNeil in Brussels and Kelvin Chan in London contributed to this report.
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