Trump Threatens 100% Tariff On Any Country With A Digital Services Tax

President Donald Trump said any country that imposes a digital services tax on U.S. companies will be hit with a 100% tariff on all goods sent to the United States. He posted on Truth Social that the tariff will supersede trade deals made with the country, whether implemented, signed, or not.

Trump added that the tariffs would be immediately imposed should countries proceed with their digital-tax plans. The threat lands one day after the EU finalized a trade pact with Washington.

What Trump actually said

Trump said numerous European countries have been discussing the imminent implementation of a digital services tax on American companies. The post singled out Europe but applies globally to any nation that moves forward with such a levy.

The president’s comments come a day after the European Union gave its final sign-off to a trade agreement with Washington that sets a 15% tariff ceiling on most of the bloc’s exports to the US. Digital services taxes were not covered by that agreement and have remained a point of contention between Washington and Brussels.

Who actually has a digital services tax

Roughly half of all European members of the OECD have proposed, announced or already implemented a digital services tax, according to the Tax Foundation, which notes that such taxes would mostly affect U.S. companies.

Britain, which is no longer part of the EU, has since 2020 levied a 2% digital services tax on revenues earned by search engines, social media sites and online marketplaces that derive value from U.K. users. France, Italy, Spain, Austria and Canada have similar regimes on the books.

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The legal question traders should care about

It is unclear which law would give Trump the authority to immediately slap tariffs on individual countries. The Supreme Court has struck down Trump’s reciprocal tariffs, which sought to impose individualized tariff rates on nearly every country, ruling that the International Emergency Economic Powers Act did not authorize the administration to unilaterally impose the sweeping global tariffs.

Hours after that defeat, Trump signed an executive order imposing a new global 10% tariff under Section 122 of the Trade Act of 1974. But tariffs created using that statute can last for only 150 days, with any extension requiring congressional approval. Translation: another court fight is likely if this is enforced.

Not the first time

Trump has repeatedly used tariff threats as leverage against foreign digital services taxes. Earlier this month, he warned France it would face 100% tariffs on wine and champagne unless Paris scrapped its levy on U.S. firms.

In 2020, the U.S. Trade Representative launched investigations into nine European Union countries that had adopted or were considering digital taxes.

Options market and stocks to watch

Big tech is the direct beneficiary if foreign DSTs get scrapped, and the direct target if they don’t. Watch for flow in:

META: Heavily exposed to EU and UK digital services taxes on ad revenue. Watch for vol on any retaliation headlines.

GOOGL: Search and YouTube ad revenue across Europe make Alphabet a primary beneficiary of any DST rollback.

AMZN: Marketplace fees in the UK and France are directly hit by DSTs; watch for sentiment shifts.

AAPL: App Store revenue caught in the same net. Also exposed if Europe retaliates on U.S. goods.

MSFT: Cloud and software services revenue in Europe makes it watchable on every DST headline.

For ongoing tariff and policy headlines, see other news here.

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