U.S. President Donald Trump has directed the national Trade Representative to reinstate investigations into digital services taxes imposed on American technology companies by various countries.
According to a White House official, U.S. President Donald Trump directed his administration to consider tariffs and other responsive actions against “the digital service taxes (DSTs), fines, practices, and policies that foreign governments levy on American companies” perceived by the U.S. government as discriminatory taxation.
Several countries, including the UK, France, Italy, Spain, Turkey, India, Austria, and Canada, have implemented digital services taxes (DSTs), targeting revenue generated by major technology companies operating within their jurisdictions.
These taxes apply to sales revenue earned by digital platforms, search engines, social media companies, and online marketplaces rather than traditional corporate income tax based on profits. Governments argue that these measures ensure fair taxation, as many tech giants generate significant revenue in these countries without a corresponding local tax burden. However, these policies have sparked tensions with the United States, which views them as unfairly targeting American technology firms, which represent the majority of popular digital platforms.
Initially, digital service tax investigations were initiated during Trump’s first term as President. The responsible agencies were supposed to look into digital services taxes imposed by various countries, including those in the European Union, the United Kingdom, and Turkey, and mainly aimed at dominant US tech giants, including Alphabet’s Google, Meta’s Facebook, Apple, and Amazon.
The U.S. Trade Representative (USTR) initiated a Section 301 investigation into unfair trade practices by several of these nations, concluding that their digital services taxes unfairly targeted American companies. This determination opened the door for the U.S. to impose retaliatory tariffs on specific imported goods from these countries.
Last week, President Trump signaled his intent to impose tariffs on Canadian and French goods in response to their digital services taxes. According to a White House fact sheet released at the time, both countries had been collecting over $500 million annually in DST revenue, with global collections exceeding $2 billion.
The order to revive the investigations comes with the directive to determine any additional countries that use a digital tax “to discriminate against US companies.” The fact sheet mentioned above has a particular focus on how U.S. firms are treated under the EU’s Digital Markets Act and Digital Services Act.
The move aligns with a broader U.S. administration strategy of using trade policy as a tool to protect national interests. Critics, however, warn that such actions could escalate trade tensions, potentially leading to retaliatory measures from affected countries.
