Trump Threatens Tariffs on U.K. Over Digital Services Tax
President warns of 'big tariff' unless U.K. drops 2% tax on U.S. tech giants, ahead of King Charles's state visit
Quick Look
- Trump has threatened to impose steep tariffs on the U.K. unless it drops its 2% digital services tax on U.S. tech companies including Google, Meta and Apple.
- Speaking from the Oval Office, Trump said the U.K. 'better be careful' and should drop the tax.
- The tax, introduced in 2020, raised £800 million in 2024-2025.
AI-generated summary
Why It Matters
The U.K.'s digital services tax was introduced in 2020 targeting major U.S. tech companies. It applies to search engines, social media platforms and online marketplaces deriving value from U.K. users. The tax raised approximately £800 million in the 2024-2025 financial year and remained unchanged when the U.S. and U.K. agreed to a trade deal in May 2025.
U.S. President Donald Trump has delivered a stark warning to the U.K., threatening to impose steep tariffs on the country unless it drops its digital services tax on U.S. tech companies. The tax, which was first introduced in 2020, is a 2% levy on the revenues of search engines, social media services and online marketplaces that derive value from U.K. users. This includes several U.S. companies like Alphabet's Google, Meta and Apple.
Speaking from the Oval Office on Thursday, Trump criticized those he said were seeking to make an "easy buck" by targeting American companies. "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," Trump said. "If they don't drop the tax, we'll probably put a big tariff on the U.K.," he added, without providing a specific figure.
CNBC has contacted the U.K.'s Department for Business and Trade and is awaiting a response. Britain's ruling Labor government has previously defended the tax, which it sees as an important fiscal measure given it raised revenues of around £800 million ($1.08 billion) in the 2024-2025 financial year. The measure went unchanged when the U.S. and U.K. agreed to a trade deal in May last year, although Trump told Sky News earlier in the month that the terms of the agreement "can always be changed."
Trump's comments follow a series of publicly critical remarks about U.K. Prime Minister Keir Starmer in recent weeks, reviving trans-Atlantic trade tensions ahead of a four-day U.S. state visit by King Charles III and Queen Camilla. The king and queen are scheduled to travel to the U.S. on Monday and are expected to meet Trump at the White House.
What to Watch
AI outlook — possibilities, not facts
The U.K. government will likely face pressure to modify or delay the digital services tax
Likely · Within weeks
King Charles's state visit may include discussions on the tariff threat
Very likely · Within days
Open Questions
- What specific tariff rate would Trump impose?
- Will the U.K. government drop or modify the digital services tax?
- How will this affect the King Charles state visit?
