When US president Donald Trump threatens to slap a 100% tariff on all goods from the UK, he isn't railing against British steel or Scotch whisky — he's targeting a tax on the digital services of American tech giants. The row revolves around the UK's digital services tax (DST), a 2% levy on the revenues of companies like Google, Apple and Meta that earn billions from British users. Trump has warned that any country imposing such a tax will be met with a 100% tariff on all its exports to the US, and he has said this would override any existing trade deal. For UK businesses and consumers, the stakes are high: a full-blown trade war could raise prices on everything from cars to food.
The digital services tax, introduced in 2020, applies a 2% charge on the revenues of major US technology companies. It only kicks in when a firm has global digital revenues exceeding £500 million and earns more than £25 million from British users. According to a 2025 Treasury review, the levy raised more than £800 million in 2024–25, up from £678 million the year before. The tax was designed to ensure that tech giants pay more UK tax on the value they derive from British users, rather than shifting profits to low-tax jurisdictions. France has a similar 3% levy on digital revenues, introduced in 2019, and other European countries have been considering their own versions.
“The digital services tax (DST): why the UK charges tech giants 2% and why Trump threatens 100% tariffs.”
Why does the US oppose it so strongly? For Washington, the tax disproportionately hits American companies — the world's largest digital platforms are predominantly US-based. Both Donald Trump and his successor Joe Biden have criticised the measure, arguing it unfairly targets US firms and violates international tax norms. Trump has repeatedly threatened retaliation, writing on his Truth Social platform in June 2026: “Any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America.” He has also warned France specifically, saying if Paris does not drop its 3% digital tax, he will impose 100% tariffs on French wine and champagne.
For UK readers, the practical impact could be severe. America is one of Britain's largest trading partners, and a 100% tariff would make UK exports — from cars and machinery to food and drink — prohibitively expensive for US buyers. The UK government would face a difficult choice: scrap the DST, losing up to £800 million a year in revenue, or risk a trade war that could harm thousands of British jobs. The row also complicates post-Brexit trade deals: the UK has already signed a trade agreement with the US, but Trump says his tariff would supersede any such deal, “whether implemented, signed, or not.”
Q: What is the digital services tax (DST)? The DST is a 2% levy on the UK revenues of large digital companies. It applies to firms with global digital revenues over £500 million and at least £25 million from UK users. It was introduced in 2020 to ensure tech giants pay more tax on profits generated from British consumers.
Q: Why does the US want the UK to scrap the DST? The US argues the DST unfairly targets American companies — such as Apple, Google and Meta — and discriminates against US technology. Both President Trump and former President Biden have condemned the tax, and Trump has threatened a 100% tariff on UK goods if the UK does not abolish it.
Q: What would a 100% US tariff mean for the UK economy? A 100% tariff would double the price of UK exports to the US, likely causing a sharp drop in sales. Key British industries like automotive, manufacturing and food and drink would be hit hard, potentially leading to job losses and higher prices for consumers. The row also risks damaging the broader UK-US trade relationship.
What happens next is uncertain but the clock is ticking. Trump has set a July 4 deadline for the European Union and the US to approve a separate tariff deal capping most EU exports at 15%, but digital taxes were not part of that agreement and remain a sticking point. The UK government has so far stood by the DST, but faces mounting pressure from Washington. Whether Britain will cave, negotiate, or hold firm — and whether Trump will follow through on his threat — will determine the future of this transatlantic trade dispute.