The US administration indicated that it would like digital taxes to be reversed, since they are “designed to harm” American technology, in the government’s view. Last week, the US and Europe agreed to work together to look at unfair trade barriers. Still, in response to Trump calling out digital taxes as unfair, Europe highlighted its right to manage domestic economic activity in alignment with its values. Europe is keen to manage the power of tech companies with its Digital Services Act.

• Countries that impose digital taxes could face additional tariffs from the US. US President Donald Trump called out digital taxes and related legislation on American technology companies, such as Meta and Amazon, as discriminatory. Trump threatened to restrict US exports of protected technology to countries that don’t reverse the taxes.
• France was one of the earliest to set up a Digital Service Tax (DST) of 3%. Annual revenue has increased each year since 2019 and reached roughly €750 million in 2024.
• UK’s DST collects around £800 million annually. In April, UK Prime Minister Starmer offered to reduce the tax as part of trade negotiations, but the 2% levy remains today. The US administration was disappointed the DST was not withdrawn in the May trade deal.
• A DST is an effort to tax companies that don’t have physical stores or offices in countries where they operate. The tax is intended to compensate for the loss in tax revenue from fewer brick-and-mortar stores.

At the end of June, Canada reversed a planned 3% DST so that trade talks with the US could continue. Digital regulation is a critical element of global trade discussion since the companies involved have such high market valuations, annual revenues and influence.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.