Trump threatens 100% tax on European imports if countries impose tax on digital services

President Donald Trump on Friday threatened to impose a 100% tax on imports from any country that imposes a tax on digital services from US companies.

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

“Please let this statement represent that any country imposing such a tax will immediately be met with a 100% tariff on any and all goods sent to the USA,” Trump wrote.

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

The move could lead to a bigger confrontation that could raise prices and hamper economic growth, and possibly lead to a bigger trade war if the 27-member European Union is forced to retaliate.

“Unilateral measures targeting such legitimate policies are unjustified. If pursued, the European Union will respond quickly and decisively to defend its rights and regulatory independence,” European Commission spokesman Olof Gehl said on Friday.

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

Trump has repeatedly opposed foreign efforts to tax or regulate giant American technology companies. Last year, he threatened to impose new tariffs on any country that moved to do so. Digital taxes and regulations “are all designed to harm or discriminate against American technology,” a post from last August said.

The threat comes ahead of Trump’s July 4 deadline for the European Union and the United States to begin implementing a tariff agreement that sets tariffs on most EU exports at 15%.

The European Union finalized a trade agreement with the United States in May, setting a maximum tariff on EU exports at 15%. The deal came after months of debate within the European Union after European Commission President Ursula von der Leyen initially concluded the deal last year during a visit to Trump’s golf course in Scotland.

Digital taxes were not part of the agreement and remain a sticking point between the US and the European bloc.

The US government has previously investigated tariffs in digital services taxes under Section 301 of the Trade Act of 1974. But it was not clear how Trump would implement his threat and whether he would apply tariffs broadly or target specific countries initially.

Britain, which is no longer part of the European Union, has since 2020 imposed a 2% digital services tax on revenue generated by search engines, social media sites and online marketplaces that “derive value” from UK users.

The British government said in a policy document at the time that corporate tax rules for digital businesses had “led to an imbalance between where profits are taxed and where value is created.”

UK tax has thresholds, so it will mainly be paid by large international companies. The tax aims to “ensure that large multinational companies in scope make a fair contribution to support vital public services,” the document said.

___

AP reporters Sam McNeil in Brussels and Kelvin Chan in London contributed to this report.