US President Donald Trump has threatened to impose tariffs on the UK if it refuses to drop its digital services tax on American technology companies, marking the latest escalation in trade tensions over US tech.
Trump's Warning to the UK
Speaking to reporters from the Oval Office on Thursday, Mr Trump said: "We've been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful. If they don't drop the tax, we'll probably put a big tariff on the UK."
The digital services tax, introduced in 2020, imposes a 2% levy on the revenues of several major US tech firms. It applies to companies whose global revenues from digital activities exceed £500 million, with more than £25 million of those revenues coming from UK users.
Trump's Criticism of the Tax
Mr Trump claimed the laws, which have long been a point of contention in UK-US relations, targeted "top companies in the world." He said: "The UK did it, a couple of other people did it. They think they're going to make an easy buck, that's why they've all taken advantage of our country."
The digital services tax remained unchanged under the UK–US trade deal agreed in May 2025, despite being a topic of discussion during negotiations. When asked how steep the tariff would be, the president stated it would be "more than what they're getting" from the levy. "What we'll do is we'll reciprocate by putting something on that's equal or greater than what they're doing," he added.
Broader UK-US Tensions
The latest comments add to mounting strains in UK-US relations, which have worsened following Prime Minister Sir Keir Starmer's decision to rule out British involvement in the Middle East conflict. Earlier this month, Mr Trump suggested the terms of the UK-US trade agreement brokered last year "can always be changed" in an interview with Sky News.
PM's Stance on Iran War
During Prime Minister's Questions in the House of Commons, Sir Keir addressed the pressure from the US over the Iran war. He told MPs: "My position on the Iran war has been clear from the start. We're not going to get dragged into this war. It is not our war. A lot of pressure has been applied to me to take a different course, and that pressure included what happened last night. I'm not going to change my mind. I'm not going to yield. It is not in our national interest to join this war, and we will not do so. I know where I stand."
Previous US Threats
Mr Trump's remarks come several months after comparable US threats to introduce fresh tariffs and export controls on nations with digital taxes or regulations that affect American tech giants. Several European countries, including France, Italy and Spain, also operate a digital services tax. In a post on Truth Social from August 2025, Mr Trump said he would "stand up to countries that attack our incredible American Tech Companies."
"Digital Taxes, Digital Services Legislation, and Digital Markets Regulations are all designed to harm, or discriminate against, American Technology," he wrote. "This must end," he declared, pledging that "unless these discriminatory actions are removed," he would "impose substantial additional tariffs" on the exports of offending nations to the US.
Downing Street has been approached for comment by PA Media.
