One social media post, one 100% tariff threat — and Europe had until the end of the sentence to decide what to do next. Any country that taxes American tech companies will immediately face a 100% tariff on all goods it sends to the United States, President Donald Trump threatened on Friday in a social media post, singling out European nations he said were discussing the “imminent” implementation of such taxes. The penalty, Trump said, would supersede any previously negotiated trade deals.
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“Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America”, Trump wrote.
“Unilateral measures targeting such legitimate policies are unjustified. If pursued, the EU will respond swiftly and decisively to defend its rights and regulatory autonomy”. — Olof Gill, spokesperson, European Commission
The European Commission pushed back immediately. Spokesperson Olof Gill defended digital taxation as “non-discriminatory” and applied equally to “all large companies, regardless of their origin”. The move could lead to higher prices, hindered economic growth, and a larger trade war if the 27-member European Union was compelled to retaliate.
A deadline and a sticking point
The threat lands ahead of Trump’s July 4 deadline for the EU and the US to begin implementing a tariff deal — finalised by the EU in May — that caps most tariffs on EU exports at 15%. That deal followed months of debate within the EU after European Commission chief Ursula von der Leyen tentatively struck it while visiting Trump’s golf course in Scotland. Digital taxes were not part of the agreement and have remained a sticking point between the two sides.
It was unclear how Trump would carry out the threat or whether he would apply tariffs broadly or initially target certain nations. The US government has previously conducted tariff investigations into digital services taxes under Section 301 of the Trade Act of 1974.
The UK’s existing tax
Britain, no longer part of the EU, has levied a 2% digital services tax since 2020 on revenues earned by search engines, social media sites, and online marketplaces that derive value from UK users. The British government said 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 tax was designed mainly to apply to large international companies and to ensure they make a fair contribution to public services.
A pattern of pressure
Trump has repeatedly pushed against foreign efforts to tax or regulate American tech giants. Last August, he warned of new tariffs on any country that moved to do so, describing digital taxes and regulation as “all designed to harm, or discriminate against, American Technology”.
- Source: The Associated Press