Trump Threatens UK with 'Big Tariff' Over Digital Services Tax
US President Donald Trump has threatened to impose significant tariffs on UK goods if Britain does not repeal its Digital Services Tax, reigniting a transatlantic trade dispute that puts the UK's technology policy and its trading relationship with Washington under intense pressure.
The warning, issued on 24 April 2026, targets the 2% levy the UK applies to the revenues of large American technology companies, including Google, Apple, and Meta. Trump described the tax as "unfair" and accused the UK of trying to "make an easy buck" from US tech firms.
Background
The UK's Digital Services Tax (DST) was introduced in April 2020 as an interim measure, applying to companies with global digital revenues exceeding £500 million and UK revenues over £25 million. It was designed to ensure that large multinational technology companies pay tax in the jurisdictions where they generate revenue, rather than routing profits through low-tax territories. The tax was always intended as a stopgap pending a global agreement on corporate taxation through the OECD, but that broader framework has faced repeated delays.
Key Developments
Trump's threat came during remarks to reporters at the White House, where he said he would "probably put a big tariff on the UK" if the DST was not scrapped. The UK government responded by stating its intention to maintain the tax, with a Treasury spokesperson saying it ensures tech giants pay their fair share. The warning follows earlier US pressure on the UK over trade policy and comes at a sensitive time, with the two countries still negotiating a broader trade deal. According to The Guardian, the DST currently raises around £700 million a year for the UK Treasury.
Why It Matters
The dispute puts the UK government in a difficult position. Repealing the DST would cost hundreds of millions in tax revenue and could be seen as capitulating to US pressure, while maintaining it risks triggering retaliatory tariffs that could harm British exporters. The technology sector, which is a major driver of UK economic growth, is watching the situation closely.
What's Next
UK trade negotiators are expected to engage with their US counterparts to seek a resolution. The government may look to accelerate progress on the OECD global tax framework as a way of justifying the eventual removal of the DST without appearing to bow to US demands. In the meantime, British businesses that export to the US are bracing for potential disruption if the tariff threat is carried out.
