President Donald Trump threatened a 100% tariff on imports from nations that enforce digital services taxes on U.S. companies. But the law may not let him do it easily. His earlier attempt to use broad tariffs was struck down by the Supreme Court.
Trump said the tariff "will be immediately imposed" and "will supersede Trade Deals made with the Country, whether implemented, signed, or not."
Trump contends that digital services taxes discriminate against large U.S. technology firms. He wants to retaliate against any country that applies such a tax.
Canada had proposed a digital services tax earlier but dropped it after Trump threatened to cut off trade talks. Now "numerous European countries" are considering their own versions, according to Trump's post.
It is not clear what U.S. law gives Trump the authority to immediately impose these tariffs on individual European countries.
Digital services taxes typically apply a small percentage levy on revenue generated from online advertising, data sales, and other digital activities.
Proponents argue they ensure multinational tech firms pay taxes where their users are located, while critics - including the U.S. government - view them as discriminatory against American companies.
The Trump administration has previously opposed such taxes through the OECD's multilateral framework, but those negotiations stalled. Trump's latest threat signals a return to unilateral retaliation, though his legal authority to act swiftly remains in question.
The OECD's inclusive framework involved over 140 countries negotiating a two-pillar solution to tax the digital economy, but talks collapsed in 2024 after the U.S. withdrew support. This left individual nations free to implement their own digital services taxes, prompting Trump's current threat.
The European Union has been a proponent of such taxes, with countries like France and Italy already enacting them, though the U.S. has previously retaliated with tariff threats.
Trump views these levies as a direct assault on American tech giants such as Google, Apple, and Amazon, which earn substantial revenue from digital advertising and data sales abroad.
He contends that the taxes unfairly single out U.S. companies while exempting domestic competitors, a practice he considers a violation of international trade norms.
The 100% tariff threat represents an escalation in trade policy, but its enforcement faces significant hurdles beyond the 150-day limit.
This report is developing and we will provide updates as more information becomes available.
Unlock a free investing masterclass bonus when you sign up for our daily newsletter.
