Trump threatens 100% tariff on any country that imposes digital services tax
Escalating Trade Tensions Over Digital Services Tax
By Doina Chiacu and David Lawder
Trump's Warning to European Countries
WASHINGTON, June 26 (Reuters) - U.S. President Donald Trump threatened on Friday a 100% tariff on all goods from any country that imposes a digital services tax on American companies, inflaming transatlantic trade tensions a day after European Union countries met Trump's July 4 deadline to cut tariffs on U.S. goods.
"Numerous European Countries have been discussing the imminent implementation of a Digital Services Tax on American Companies," Trump said in a social media post. "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."
Implications for Existing Trade Deals
Trump said the new tariff would supersede any trade deals with the United States, "whether implemented, signed or not."
That would include the deal the U.S. and EU agreed to last year, which caps U.S. tariffs on European goods at 15% in exchange for EU countries reducing tariffs on U.S. industrial goods to zero.
EU Legislative Process and U.S. Response
But a lengthy EU legislative process to meet the bloc's commitments under the deal prompted Trump to threaten to reimpose a 25% tariff on imports from Europe, including autos. EU lawmakers then scrambled to meet a deadline from Trump to implement the changes by July 4.
France's Position on the Digital Services Tax
French President Emmanuel Macron said last week, before meeting with Trump at a G7 summit, that France would not bow to pressure from him and scrap its digital tax on U.S. tech giants. The digital services it taxes include online marketplaces and advertising.
Threats Against French Goods
Before setting off for the summit in France, Trump had warned that the U.S. would "have no choice" but to apply 100% tariffs on French wine unless Paris eliminated its digital tax.
Details of the French Digital Services Tax
France has applied a 3% levy since 2019 on revenue earned in France from digital services provided by companies with revenue of more than €25 million in the country and €750 million ($854.02 million) worldwide. French lawmakers last year proposed doubling the tax to 6%.
U.S. Trade Representative's Stance
The U.S. Trade Representative's office has long threatened France, Britain, Austria, Spain and other European countries with retaliatory tariffs if they impose digital services taxes, arguing that these levies discriminate against U.S. companies, which dominate the sector globally.
Currency Exchange Rate
($1 = 0.8782 euros)
(Reporting by Jasper Ward, David Lawder and Doina Chiacu; Editing by Chizu Nomiyama, Deepa Babington, Rod Nickel)
