US President Donald Trump has threatened to impose tariffs on the UK if it does not drop its digital services tax on American technology companies, in the latest escalation of US tech trade tensions.
The digital services tax went unchanged under the UK–US trade deal agreed in May 2025.
(Image: WILL OLIVER/POOL/EPA/Shutterstock)
US President Donald Trump has threatened to slap tariffs on the UK if it refuses to scrap its digital services tax on American social media giants.
The digital services tax, brought in during 2020, places a 2% levy on the revenues of several major US tech firms. Speaking to reporters from the Oval Office on Thursday, Mr Trump said: “We’ve been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful.
“If they don’t drop the tax, we’ll probably put a big tariff on the UK.”
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The tax applies to companies whose global revenues from digital activities surpass £500 million, with over £25 million of the revenues coming from UK users. Mr Trump claimed the laws, which have long been a flashpoint in UK-US relations, targeted “top companies in the world“.
He said: “The UK did it, a couple of other people did it. They think they’re going to make an easy buck, that’s why they’ve all taken advantage of our country.”
The digital services tax remained unchanged under the UK–US trade deal agreed in May 2025, despite being a point of discussion. Asked how steep the tariff would be, the president said it 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 said. The latest comments add to mounting tensions in UK-US relations, which have worsened following Sir Keir Starmer’s ruling out of British involvement in the Middle East conflict.
Earlier this month, Mr Trump suggested the terms of the UK-US trade agreement brokered last year “can always be changed” in an interview with Sky News.
Addressing MPs during Prime Minister’s Questions in the House of Commons, Sir Keir spoke directly to the pressure being exerted by the US over the Iran war. He told MPs: “My position on the Iran war has been clear from the start. We’re not going to get dragged into this war. It is not our war.
“A lot of pressure has been applied to me to take a different course, and that pressure included what happened last night. I’m not going to change my mind. I’m not going to yield. It is not in our national interest to join this war, and we will not do so. I know where I stand.”
Mr Trump’s remarks come several months after comparable US threats to introduce fresh tariffs and export controls on nations with digital taxes or regulations that affect American tech giants. Several European countries, including France, Italy and Spain, operate a digital services tax. In a post on Truth Social from August 2025, Mr Trump said he would “stand up to countries that attack our incredible American Tech Companies”.
“Digital Taxes, Digital Services Legislation, and Digital Markets Regulations are all designed to harm, or discriminate against, American Technology,” he wrote. “This must end,” he declared, pledging that “unless these discriminatory actions are removed”, he would “impose substantial additional tariffs” on the exports of offending nations to the US.
Downing Street has been approached for comment by PA Media.
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