Trump threatens 'big tariff' if UK does not drop digital services tax

• The UK's digital services tax imposes a 2% levy on major tech firms with worldwide digital revenues over £500m and UK revenues exceeding £25m
• Trump warned the UK to 'be careful' and said any retaliatory tariff would be 'equal or greater than' what the US loses from the tax
• The digital tax remained unchanged in the May 2025 UK-US trade deal, though Trump indicated terms 'can always be changed'; similar taxes exist in France, Italy, and Spain

Summary

Key Development: President Donald Trump has threatened to impose a "big tariff" on the UK unless it eliminates its digital services tax on U.S. technology companies, escalating tensions in U.S.-UK relations.

Tax Details: The UK's digital services tax, introduced in 2020, levies a 2% charge on revenues of major tech firms with global digital revenues exceeding £500 million and UK-specific revenues over £25 million. Trump claims this tax allows other countries to "take advantage of" the United States.

Trump's Position: Speaking Thursday, April 24, 2026, Trump warned the UK to "be careful," stating any retaliatory tariff would exceed revenue generated by the levy. He characterized the tax as an attempt to "make an easy buck" and promised reciprocal measures "equal or greater" to the UK's actions.

Trade Context: The digital services tax remained unchanged in the U.S.-UK trade deal signed in May 2025, though Trump indicated terms "can always be changed." This threat mirrors warnings issued in August 2025 against multiple countries with similar taxes, including France, Italy, and Spain.

Broader Implications: The tariff threat comes amid already strained U.S.-UK relations over the Iran war. Trump has criticized Prime Minister Keir Starmer, lamenting the "sad" state of the special relationship. However, Starmer reaffirmed his position at Prime Minister's Questions, stating the UK will not join the Iran conflict despite pressure.

Market Impact: The dispute affects major U.S. technology companies operating in the UK and potentially across Europe, with implications for international trade relations and the tech sector's regulatory environment.