A new front is being opened in trade relations with Europe, warning that the United States will impose tariffs on all imports from countries that move to impose a digital services tax on American technology companies.
The European Commission responds that member states have the sovereign right to adopt tax measures and declares that it will defend the regulatory autonomy of the Union.
Final paper via Truth Social
In a post on the Truth Social platform, the US president warned that any country that imposes a digital services tax on US businesses will face 100% tariffs on all goods it exports to the United States.
As he said, the specific tariffs will take precedence over any existing or future trade agreement, whether it has already entered into force or is still being negotiated. At the same time, he clarified that the measures will be activated immediately as soon as a country implements a digital tax.
His intervention mainly targets European governments that are considering or already maintain special taxation for the big digital platforms.
Why digital taxes are in the spotlight
Digital services taxes are designed to primarily burden the largest technology multinationals, such as , Alphabet and Amazon, which are headquartered in the United States.
The rationale behind the specific measures is that digital businesses derive significant revenue from markets where they are often taxed to a limited extent due to current international tax rules.
According to available data, more than a dozen countries already implement some form of digital tax, with several more considering its adoption.
The response of the European Commission
The European Commission rejected Washington’s threats, stressing that the European Union and its member states have the sovereign right to regulate economic activities on their territory.
A representative of the Commission underlined that the relevant taxes do not discriminate against specific countries, as they are applied with the same criteria to all large companies that meet the prescribed conditions, regardless of their nationality.
At the same time, the Commission warned that the European Union will react immediately and decisively if unilateral measures are taken that violate its rights or regulatory autonomy.
At the same time, it reiterated that it remains committed to the search for an international agreement on the taxation of the digital economy, in the context of the discussions taking place between the largest economies.
Another episode in the US-Europe dispute
The standoff over digital taxes is a constant point of tension in relations between the United States and the European Union.
Brussels in May finalized a trade deal with Washington that limits most tariffs on European exports to the US to 15%. However, the issue of taxation of digital giants was left out of the agreement and remains a key point of contention.
The new intervention of the American president comes shortly before the start of implementation of the agreement, increasing the uncertainty about the course of transatlantic trade relations.
The precedent with Canada and the attitude of France
Donald Trump has repeatedly linked digital taxes to trade retaliation.
Last year it announced it would suspend trade talks with Canada over Ottawa’s planned digital tax. Shortly before it went into effect, the Canadian government eventually withdrew the measure.
In France, by contrast, the government has chosen to keep the digital tax in place since 2019. President Emmanuel Macron has made it clear that Paris has no intention of bowing to American pressure.
The French tax is imposed on revenues from digital services of large multinationals that exceed certain turnover thresholds, with the aim – according to the French government – of a fairer distribution of the tax burden.
Legal questions on the application of tariffs
Despite Donald Trump’s clear policy warning, it remains unclear what legal framework would allow him to immediately impose tariffs of this magnitude.
The United States Supreme Court had previously rejected an attempt to impose blanket “reciprocal” tariffs, ruling that the 1977 Emergency Economic Powers Act did not give the president the ability to unilaterally implement such far-reaching trade measures.
At the same time, the US government has previously examined digital taxes through Section 301 of the Trade Act of 1974, but it has not been clarified whether the same procedure will be followed in the new case.
