Trump threatens 100% tariff penalty on countries that impose tax on digital services

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WASHINGTON — U.S. President Donald Trump on Friday threatened a 100 per cent tax on imports from any country that imposes a tax on digital services from United States companies.

In a post on social media, Trump took aim at European countries that he said are discussing “imminent” implementation of taxes on American companies. The U.S. president has repeatedly sought to use tariffs as way to deter such taxes, but many countries are looking for revenues as their economies increasingly operate in digital realms that are dominated by American companies.

“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.

He added that the new tax would supersede any previously negotiated trade deals. Trump said the penalty would apply to any country that moves forward with such a tax, but he singled out European nations in his post.

The move could lead to a larger showdown that could increase prices and hinder economic growth, possibly setting off a larger trade war if the 27-member European Union was compelled to retaliate.

“Unilateral measures targeting such legitimate policies are unjustified. If pursued, the EU will respond swiftly and decisively to defend its rights and regulatory autonomy,” said Olof Gill, a spokesperson for the European Commission on Friday.

He defended taxation on technology companies as “non-discriminatory” and applied equally to “all large companies, regardless of their origin.”

Trump has repeatedly pushed against foreign efforts to tax or regulate American tech giants. Last year, he threatened new tariffs on any country that moved to do so. A post from last August said that digital taxes and regulation “are all designed to harm, or discriminate against, American Technology.”

The threat comes ahead of Trump’s July 4 deadline for the European Union and the United States to start implementing a tariff deal that caps tariffs on most EU exports at 15 per cent.

The European Union in May finalized a trade deal with the United States that caps most tariffs on EU exports at 15%. The deal followed months of debate within the EU after European Commission chief Ursula von der Leyen tentatively struck the deal last year while visiting Trump’s golf course in Scotland.

Digital taxes were not part of the agreement and have remained a sticking point between the U.S. and the European bloc.

The U.S. government has previously conducted tariff investigations into digital services taxes under Section 301 of the Trade Act of 1974. But it was unclear how Trump would carry out his threat and whether he would apply the tariffs broadly or initially target certain nations.

Britain, which is no longer part of the EU, has since 2020 levied a two per cent digital services tax on revenues earned by search engines, social media sites and online marketplaces that “derive value” from U.K. users.

The British government said in a policy document 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 U.K. tax includes thresholds, so mainly large international companies will pay it. The tax was designed to “ensure the large multinational businesses in-scope make a fair contribution to supporting vital public services,” the document said.

AP Business Writer Kelvin Chan contributed to this report from London.

Collin Binkley, The Associated Press