Donald Trump is putting the UK on notice: drop the digital services tax on American tech companies or face significant tariffs. The US president made the threat during remarks to reporters at the White House on Thursday, escalating pressure on a tax that has become a major flashpoint between Washington and London.
The UK implemented the 2% digital services tax in 2020, targeting global tech firms with digital revenues exceeding £500 million, of which at least £25 million comes from British users. The levy has primarily affected major US social media and technology giants operating in the UK market.
"We can meet that very easily by just putting a big tariff on the UK, so they better be careful," Trump said from the Oval Office. "If they don't drop the tax, we'll probably put a big tariff on the UK."
When pressed on how high any tariff might go, Trump indicated it would exceed what the UK collects from the digital tax itself. "We'll reciprocate by putting something on that's equal or greater than what they're doing," he said.
The president framed the digital tax as an unfair grab by countries trying to exploit American companies. "They think they're going to make an easy buck, that's why they've all taken advantage of our country," Trump said, noting that other nations including France, Italy, and Spain have enacted similar levies.
Notably, the digital services tax remained unchanged when the UK and US finalized a trade deal in May 2025, despite the levy being part of negotiations between the two countries. Trump's latest comments suggest he views that outcome as unfinished business.
The threat reflects a broader Trump administration strategy on digital taxation globally. In August 2025, the president posted on Truth Social that he would "stand up to countries that attack our incredible American tech companies." He characterized digital taxes and related regulations as discriminatory tools designed to harm American technology firms and pledged "substantial additional tariffs" on any nation that fails to remove such measures.
The UK-US relationship has already faced strain in recent weeks. Sir Keir Starmer ruled out British military involvement in Middle East conflicts, drawing Trump's criticism. Earlier this month, Trump suggested the terms of last year's trade agreement "can always be changed," signaling flexibility on a deal the UK considers settled.
Author James Rodriguez: "Trump is turning trade agreements into leverage for his corporate allies, and the UK appears to be his first major test of how seriously he'll follow through."
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