Donald Trump has threatened to impose a 'big tariff' on the UK if it does not scrap its digital services tax (DST) on US technology companies. Speaking from the Oval Office on Thursday, the US president said: 'If they don't drop the tax, we'll probably put a big tariff on the UK.'
The DST, introduced in 2020, levies a 2% charge on revenues of major US tech firms such as Amazon, Google and Apple. Downing Street responded on Friday that the UK has no intention of removing the tax, calling it 'a fair and proportionate approach to taxing business activities in the UK'.
The tax is intended as an interim measure, with the UK agreeing in 2021 to phase it out once a global system brokered by the OECD is implemented. However, that deal — setting a minimum 15% corporation tax for large multinationals — has faced repeated delays. Trump argued the DST targets 'the top companies in the world' and accused the UK of trying to 'make an easy buck'.
The threat adds to strains in US-UK relations, which have worsened since Keir Starmer ruled out UK involvement in the Iran war. Earlier this month, Trump suggested the terms of the UK-US trade deal 'can always be changed'. Meanwhile, it emerged on Friday that Pentagon officials have explored 'punishing' Nato allies, including reviewing the US position on the Falkland Islands, over insufficient support in the Middle East.
Trump did not specify the size of the tariff, saying only that it would be 'equal or greater than what they're doing'. The UK government maintains that the DST is a vital revenue source, estimated to raise up to £5.2bn by 2029.
