U.S. President Donald Trump on June 26 threatened to impose a 100 percent tariff on all goods imported from any country that levies a Digital Services Tax (DST) on American technology companies, opening a new front in the long-running transatlantic dispute over how to tax global online giants. The European Commission rejected the threat the following day, saying it would “respond swiftly and firmly” if Washington took unilateral action.
In a post on his Truth Social platform, Trump said any nation imposing such a tax would face an immediate 100 percent levy on all of its exports to the United States. He added that the new tariff would override existing trade arrangements, regardless of whether those agreements had already been signed, implemented or were still under negotiation. The post did not cite a specific legal basis for the measure. Subsequent news reports have indicated that White House officials are considering Section 301 of the U.S. Trade Act of 1974 as the procedural route, a provision that authorises the president to take retaliatory steps against foreign practices deemed discriminatory or restrictive toward U.S. commerce.
The threat lands just one day after the European Union formally completed the legislative steps to implement the trade agreement it had negotiated with the United States, which caps tariffs on most EU exports to the U.S. market at 15 percent. Digital taxation was not addressed in that accord. The Trump administration has long maintained that DSTs are designed to single out U.S. firms such as Alphabet, Apple, Amazon and Meta, which generate substantial advertising and platform revenue in Europe.
European Commission spokesperson Olof Gill said on June 27 that the EU and its member states had a sovereign right to regulate economic activity within their territory and that the bloc’s digital tax frameworks applied to all large companies meeting the relevant thresholds, without regard to nationality. “Unilateral measures targeting legitimate policies are unjustified,” he said, adding that Brussels would act decisively to defend its rights and regulatory autonomy. French President Emmanuel Macron has previously stated that Paris would not abandon its digital tax under U.S. pressure.
Several European countries already operate their own digital taxes. France introduced a 3 percent levy in 2019 on the local revenue of large digital platforms, with annual receipts estimated in the hundreds of millions of euros in recent years. The United Kingdom applies a 2 percent rate, while Austria, Italy, Spain and others have similar schemes in place, and additional jurisdictions are weighing legislation. The European Parliament is also examining a proposal for an EU-wide digital services tax in the range of 3 to 5 percent, targeting firms with global turnover above 750 million euros and EU revenue above 50 million euros; parliamentary technical estimates suggest such a tax could raise tens of billions of euros over the next budget cycle, though adoption would require unanimity among all 27 member states.
The dispute has also rekindled debate over an unfinished multilateral process. The Organisation for Economic Co-operation and Development has spent years coordinating talks on a global framework for taxing the digital economy, intended in part to replace national DSTs with a common set of rules. Progress on that initiative has been slow, prompting several European governments to keep their unilateral taxes in place. OECD officials have repeatedly called on governments to avoid a patchwork of national measures, warning that fragmentation discourages cross-border investment.
The legal pathway for Trump’s threat is contested. Earlier this year, the U.S. Supreme Court struck down a separate set of tariffs that the administration had imposed using emergency economic powers, ruling that those authorities did not extend to sweeping country-by-country duties. A subsequent 10 percent global tariff introduced under Section 122 of the 1974 Trade Act is time-limited to 150 days unless extended by Congress. Section 301 procedures typically require a formal investigation and findings before retaliatory tariffs can take effect, which trade lawyers say could delay implementation even if the administration moves forward.
The episode underscores the fragility of the recently concluded U.S.-EU trade deal. Brussels could respond through several channels, including targeted counter-tariffs on U.S. goods, complaints filed at the World Trade Organization, or accelerated work on the EU-level digital tax proposal. Past disputes have seen the bloc apply duties on items such as U.S. whiskey, motorcycles and agricultural products. As of late June 27, neither side had set a specific deadline for the next move, leaving businesses on both sides of the Atlantic to weigh how a renewed transatlantic tax-and-tariff confrontation might reshape commerce in services, manufactured goods and agriculture.
