Trump threatens tariffs, chip restrictions on countries imposing digital taxes
What's the story
US President Donald Trump has announced plans to impose "substantial" new tariffs and restrict exports of US chips to countries that do not remove their digital taxes and related regulations. The announcement was made on Trump's Truth Social platform. He said these Digital Services Taxes (DSTs) are "designed to harm, or discriminate against, American Technology."
Warning issued
'Show respect to America and our amazing tech companies'
Trump warned all countries imposing digital taxes, legislation, rules, or regulations that he would impose substantial additional tariffs on their exports to the US if these discriminatory actions are not removed. He also said that the US would impose export restrictions on "Highly Protected Technology and Chips." "Show respect to America and our amazing Tech Companies or consider the consequences!" Trump wrote in his post.
Tax impact
Digital service taxes are usually aimed at world's biggest tech
Digital service taxes are usually aimed at the world's biggest and most established tech companies, such as Meta, Alphabet, and Amazon. These are all American firms. The taxes have already become a potential deal-breaker in Trump's administration's ongoing trade talks. In June, he threatened to end all trade talks with Canada over its tax but later celebrated when Ottawa repealed it just before implementation.
Domestic opposition
Digital service taxes have also drawn some bipartisan criticism
Digital service taxes have also drawn some bipartisan criticism in the United States, where most major tech companies subject to these levies are based. In 2023, Senate Finance Committee chairman and ranking member jointly warned the US trade representative that Canada's tax would subject "innovative American companies to arbitrary discrimination." However, countries imposing such taxes argue that tech giants like Amazon profit immensely from their citizens while paying little or no taxes.