Donald Trump has warned that he will “probably put a big tariff on the UK” unless it drops its digital services tax (DST) on US technology companies. Speaking from the Oval Office on Thursday, the US president accused Britain of trying to “make an easy buck” from American firms.
The DST, introduced in 2020, imposes a 2% levy on the revenues of large US tech giants such as Amazon, Google and Apple. It targets companies with worldwide digital revenues exceeding £500m and more than £25m from UK users. Tax Justice UK estimates the tax will generate £4.4bn-£5.2bn between 2024 and 2029.
Downing Street responded on Friday by stating that the UK has no intention of scrapping the tax. “Our position on that is unchanged,” said the prime minister’s official spokesperson. “It is a hugely important tax to make sure that those businesses continue to pay their share.” The DST is intended as an interim measure, with the UK having agreed in 2021 to phase it out once a global system brokered by the OECD is implemented, though that has faced delays.
Trump argued that the tax targets “the top companies in the world” and said the tariff would be “more than what they’re getting” from the levy. “What we’ll do is we’ll reciprocate by putting something on that’s equal or greater than what they’re doing,” he added. The threat comes amid wider strains in US-UK relations, including over the UK’s stance on the Iran war and Trump’s earlier suggestion that the UK-US trade deal “can always be changed”.
