Trump warns of ‘big tariff’ if UK doesn’t drop digital services tax on U.S. tech firms

In a bold declaration, U.S. President Donald Trump has warned the United Kingdom of potential hefty tariffs if it does not abolish its digital services tax aimed at American tech giants. This tax, introduced in 2020, imposes a 2% charge on the revenue generated by search engines, social media platforms, and online marketplaces that benefit from U.K. users, impacting major U.S. firms like Alphabet, Meta, and Apple. During a recent address from the Oval Office, Trump criticized those profiting at the expense of American companies, asserting, "We have been looking at it, and we can meet that very easily by just putting a big tariff on the U.K., so they better be careful." He emphasized the seriousness of his stance, stating, "If they don't drop the tax, we'll probably put a big tariff on the U.K.," though he refrained from detailing specific tariff rates. CNBC has reached out to the U.K.'s Department for Business and Trade for comments but has yet to receive a reply. The tax has been backed by Britain’s ruling Labour government, which views it as a crucial source of revenue, having generated approximately £800 million ($1.08 billion) in the financial year 2024-2025. Despite the U.S. and U.K. having previously reached a trade agreement in May of last year, Trump noted that the deal’s terms could be revised. His remarks come amid a backdrop of escalating tensions with U.K. Prime Minister Keir Starmer, just days before the anticipated four-day visit of King Charles III and Queen Camilla to the U.S., during which they are expected to meet Trump at the White House.