Trump revives tariff probe over foreign digital taxes on US Tech

President Trump ordered the Office of the US Trade Representative (USTR) to propose import tariffs on countries that levy digital taxes on US tech companies.

According to a White House fact sheet, Trump wants the US Trade Representative office to reopen investigations initiated during his first term into countries that impose digital service taxes (DSTs) to discriminate against US companies.

With this move, he hopes to discourage foreign governments from taxing major US tech corporations like Alphabet and Meta. 

Trump even commented, “What they’re doing to us in other countries is terrible with digital.”

Trump’s administration imposed tariffs on countries with DSTs in 2019, during his first term.

When asked to give more details on Trump’s plans, a white house official stated that the president will not have other countries “appropriate America’s tax base” for their own gains.

This is not Trump’s first time raising concerns about foreign government taxation policies. In 2019, the USTR investigated the tax systems of France, Italy, India, Spain, and other countries under Trump’s orders. It concluded then that their digital service taxes were discriminatory and harmed American tech firms. Thus, the office launched Section 301 unfair trade practices against these countries, necessitating tariffs on some imports.

Since then, some countries opted to pull back their tax plans and even settled for international talks on reduced taxes on tech firms. However, there’s not really been much progress from their discussions.

Currently, France, Turkey, Spain, Britain, Italy, India, Canada, and Austria have all imposed taxes on US tech sales revenues. Moreover, the Computer and Communications Industry Association estimates that roughly 30 countries have levied DSTs in the last few years, with Canada imposing them in 2024.

Trump’s plans to counter DSTs could escalate tensions between the US and Europe

France’s finance minister, Eric Lombard, has insisted that they will not withdraw their digital service taxes on US tech multinationals. In an interview with Bloomberg, he stated, “It’s not changing.” arguing that their tax policy is not a negotiating tool. 

He also argued that taxes are a question of sovereignty and that every nation has its policies, hoping that their stance would not result in a conflict with the US government.

The European nation was actually one of the first to implement DSTs, and they had previously started negotiations with the US to reverse some of its tax plans. However, the two countries never completed their negotiations, and France’s taxes are still hitting hard American tech corporations. 

With the Trump administration considering retaliatory measures against France and other European nations, tensions could escalate—especially since most of Europe opposes Trump’s decision to negotiate a truce directly with Russian President Vladimir Putin over the Ukraine war.

Aside from the digital service tax issue, the Trump administration wants to check whether any European Union or UK practices incentivize US companies to develop products that undermine free speech.  Trump and Vice President JD Vance have spoken over some of European regulations that they claim have stifled conservative voices. 

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