Trump threatens 'big tariff' if UK does not drop digital services tax on US tech firms

Donald Trump has threatened to impose "a big tariff" on the UK if it does not drop its digital services tax on US social media companies.

The tax, which was introduced in 2020, imposes a 2% levy on the revenues of a number of major tech firms.

It targets companies whose worldwide revenues from digital activities exceed £500m, with more than £25m of the revenues from UK users.

Speaking to reporters on Thursday, Mr Trump warned the UK it "better be careful", insisting that any tariff would be "more than what they're getting" from the levy.

The US president said: "We've been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful.

"If they don't drop the tax, we'll probably put a big tariff on the UK."

Downing Street is yet to comment on the US president's remarks.

US being 'taken advantage of'

Mr Trump claimed the laws - a source of tension in UK-US relations that has been further strained by the Iran war - has resulted in the US being "taken advantage of", with the president accusing the UK of trying "to make any easy buck".

He added: "What we'll do is we'll reciprocate by putting something on that's equal or greater than what they're doing."

The digital services tax went unchanged under the trade deal agreed by the US and UK in May 2025, despite it being a point of discussion.

However, in an interview with Sky's Mark Stone earlier this month, the US president suggested the terms of the agreement "can always be changed".

Mr Trump's tariff threat come months after similar warnings to impose additional costs and export controls on countries with digital taxes or regulations impacting American tech giants.

A number of other European countries - including France, Italy and Spain - also have a digital services tax.

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In a social media post in August last year, Mr Trump said he would "stand up to countries that attack our incredible American Tech Companies".

He claimed that the taxes are "designed to harm, or discriminate against, American technology", and vowed to "impose substantial additional tariffs" unless the "discriminatory actions are removed".

Starmer: 'I know where I stand'

Mr Trump has repeatedly been critical of Sir Keir Starmer and the UK government since the start of the conflict in the Middle East.

The president said "this is not Winston Churchill we're dealing with" in reference to Sir Keir, and lamented the "sad" state of America's special relationship with the UK.

However, speaking at Prime Minister's Questions, Sir Keir doubled down on his position on the war.

He told MPs: "My position on the Iran war has been clear from the start. We're not going to get dragged into this war. It is not our war.

"A lot of pressure has been applied to me to take a different course... I'm not going to change my mind. I'm not going to yield.

"It is not in our national interest to join this war, and we will not do so. I know where I stand."

(c) Sky News 2026: Trump threatens 'big tariff' if UK does not drop digital services tax on US tech firms