PoliticsJun 26, 2026
Trade War Escalates Over Digital Services Tax Disagreements
Foreign Policy
Rhea Lobo
Discover
President Trump threatened a 100% tariff on all goods from any country that imposes a digital services tax on American companies.
He posted the warning on Truth Social on June 26, singling out European countries he said were close to implementing such taxes.
The threat would override existing trade deals, including the US-EU agreement that caps tariffs on European goods at 15% in exchange for the EU reducing tariffs on US industrial goods to zero.
The timing is pointed. EU countries had just scrambled to meet Trump's July 4 deadline to implement that deal, cutting tariffs on US goods the day before his latest threat landed.
Since 2019, France has imposed a 3% tax on digital services provided by large companies while French lawmakers later proposed raising it to 6%.
Ahead of last week's G7 summit, Trump warned the US would have no choice but to impose 100% tariffs on French wine unless Paris scrapped the tax. Macron rejected the demand before the two leaders met, saying France would not bow to pressure.
Trump's new post broadens the target from French wine to all goods from any country with such a tax.
About half of European OECD countries have either proposed, announced, or adopted digital services taxes, according to the Tax Foundation. Digital services taxes are structured to apply mostly to large US tech companies like Meta, Alphabet, and Amazon, which dominate the sector globally.
It's not clear which law would give Trump the power to immediately impose these tariffs. The Supreme Court recently struck down his global reciprocal tariffs, ruling that the International Emergency Economic Powers Act didn't authorize sweeping unilateral levies.
Hours after that ruling, Trump signed an executive order imposing a new 10% global tariff under Section 122 of the Trade Act of 1974. Any tariffs imposed under Section 122 automatically lapse after 150 days without congressional approval to extend them.
A US trade court also ruled last month against Trump's 10% global tariff, concluding the 1970s trade law did not support blanket tariffs.
Court defeats haven't stopped the threats. Earlier this month, Trump proposed tariffs of 10% to 12.5% targeting 60 trading partners, citing alleged failures to address forced labor. The pattern is consistent: threats escalate faster than legal frameworks can contain them.
