Donald Trump’s threat of a 100 per cent import tariff on the UK over Britain’s digital services tax on American social media firms is “not a bluff”, a US trade representative has said.
Back in June, the US president warned of imposing the tariff on European countries, including the UK which taxes companies, such as Google and Apple, with global digital revenues exceeding £500m.
The two per cent levy is viewed as an important revenue stream for The Treasury, raising £800m in 2024/25, up from £678m in 2023/24.
Mr Trump’s threat in June followed a similar warning the month before when he indicated that substantial tariffs could be imposed unless the UK reversed its digital services tax on American technology firms.
However, despite the threats the US administration has so far not yet followed them up with action.
But speaking to The Times, US trade representative Jamieson Greer said the warnings were “not a bluff” - although when asked about a deadline, he appeared to give new prime minister Andy Burnham some time to respond.
He said: “I don’t set artificial timelines. All I know is the president is eager to enforce our trade policy, he’s eager to make sure our companies aren’t discriminated against.”
The UK’s global digital revenues levy, implemented in 2020, applies a charge on incomes of major US companies such as Apple, Alphabet’s Google, and Meta - but it has faced criticism from both Mr Trump and his successor, Joe Biden.
The issue arose as the UK-US trade deal, signed last year, came under increasing strain toward the end of Sir Keir Starmer’s premiership, with the US president criticising Sir Keir over decisions on North Sea drilling and migration.
In his latest threat in June, Mr Trump wrote on his Truth Social platform: “Numerous European Countries have been discussing the imminent implementation of a Digital Services Tax on American Companies.
“Some of these countries are close to actually doing this.
“Please let this statement serve to represent that 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.”
Despite the tension between the two governments over the issue, Mr Greer told The Times that he had a good relationship with the UK’s business and trade minister Jonathan Reynolds.
He said: “We’ve had very constructive relationships, we’d love to keep talking to them about this issue. The president is quite serious about digital services taxes all over the world, we’ve had Canada roll back one, we’ve had other countries decline to move forward.
“We have a handful of countries in Europe and the UK who have these in place, so we’re interested in seeing those eliminated. We’re always happy to talk to our UK counterparts about the best way to do that.”
In July, the US imposed new tariffs on 60 countries, with European Union states seeing tariffs reduced from 15 per cent to 10 per cent. Britain’s 10 per cent tariff remained the same. The levelling up of tariffs between the UK and the EU.
It led to the head of the British Chambers of Commerce voicing fears the UK had lost its comparative advantage against the EU, with the UK exporting more to the US than to any other single country.
