Trump Threatens Tariffs on UK Over 2% Digital Tax

Speaking from the Oval Office on Thursday, President Trump warned the United Kingdom that the United States would impose steep tariffs on British imports if London does not repeal its 2% digital services tax on American technology companies.

The levy, introduced in 2020, charges 2% on revenues from digital activities for firms with more than £500 million in global revenue and at least £25 million of that coming from UK users. The measure covers large U.S. tech companies including Amazon, Google and Apple. Tax Justice UK estimated the charge could raise between £4.4 billion and £5.2 billion for 2024–2029. Downing Street’s official spokesperson described the tax as “a hugely important tax to make sure that those businesses continue to pay their share,” and said the government intends to replace the national levy once a wider international framework takes effect.

Trump characterized the levy as discriminatory toward U.S. firms and said Washington could respond by matching or exceeding the revenue the UK collects through import duties. He told reporters the United States could “meet that very easily by just putting a big tariff on the UK” and, when asked about size, said any tariff would be equal to or greater than UK collections. In August 2025 he wrote on Truth Social that “digital taxes, digital services legislation, and digital markets regulations are all designed to harm, or discriminate against, American technology,” and warned of “substantial additional tariffs” if such measures remained.

The tax remained during negotiations that produced a UK–U.S. Economic Prosperity Deal in May 2025. In 2021 the UK agreed to replace its national levy once an Organization for Economic Co-operation and Development plan to reallocate taxing rights and introduce a 15% global minimum corporate tax took effect. That OECD plan, originally due to take effect in 2024, has been delayed by objections from several countries.

The dispute comes amid wider strains in the bilateral relationship, including disagreements related to the war in Iran. The UK parliament’s Business and Trade Committee opened a formal inquiry into U.S.-UK ties, noting the United States accounts for about 17% of the UK’s total trade and 22% of its exports. Committee chair Liam Byrne said businesses need “more predictability” and warned the UK could fall behind without a clear strategy.

Economic pressures are complicating possible concessions. The International Monetary Fund cut Britain’s 2026 growth forecast by 0.5 percentage points, the largest downgrade among G7 economies, and projected inflation near 4% alongside rising unemployment. The IMF pointed to the UK’s reliance on gas for power and the impact of the Iran conflict on energy markets as contributing factors.

France, Italy and Spain operate similar digital levies, and governments continue to negotiate an international approach to taxing multinational digital companies.