Despite 'Big Tariff' Threat From Trump, UK Urged to 'Raise, Not Abolish' Tax on Tech Giants
"We need to stop kowtowing to him, stop offering him humiliating and unpopular 'state' visits, and start enacting economic policies that put the interest of people here ahead of Donald Trump," said one campaigner.
After President Donald Trump threatened to impose a new tariff on the United Kingdom over its Digital Services Tax, the head of a UK economic justice organization on Friday called for standing up to the US leader and even increasing the levy.
The 2% tax on digital companies such as search engines and social media networks that derive value from UK users—which applies to US tech giants such as Apple, Amazon, and Alphabet's Google—has generated significant revenue annually, including £808 million, or over $1 billion, for the 2024-25 financial year.
"We don't like it when they target American companies... whether we like those companies or don't like 'em," Trump—whose inauguration last year featured several ultrarich tech executives—said Thursday. He accused the UK of trying to "make an easy buck" and warned that "they better be careful."
"If they don't drop the tax, we'll probably put a big tariff on the UK," the president continued, suggesting that the tariff would be "more than what they're getting" from the policy targeting Big Tech.
Responding in a Friday statement, Nick Dearden, director of UK-based advocacy group Global Justice Now, said that "Trump's latest threats prove, yet again, that if you give in to a bully, they'll just come back for more."
Just months after striking a bilateral trade deal that notably did not alter the tax on tech companies, Trump and UK Prime Minister Keir Starmer signed an artificial intelligence pact last September. The latter, said Dearden, "rolled out the red carpet to Trump's Big Tech barons."
"But this wasn't the end of the story. Rather, the pact has given Trump an ongoing vehicle to bully the British government," the campaigner continued. "It's time to admit that Stramer's strategy towards Trump has been an abject failure. We should raise, not abolish the digital services tax, which has already raised billions of pounds for the British economy."
"Trump won't like this but that's just too bad, we need to stop kowtowing to him, stop offering him humiliating and unpopular 'state' visits, and start enacting economic policies that put the interest of people here ahead of Donald Trump," he argued—as the UK's King Charles III and his wife Camilla, the queen consort, prepare to meet with Trump at the White House on Monday.
Asked about Trump's tech tax threats, a spokesperson for Starmer's office told The Guardian that "our position on that is unchanged... It is a hugely important tax to make sure that those businesses continue to pay their share. So it is a fair and proportionate approach to taxing business activities in the UK."
As the newspaper noted:
The digital services tax is only meant to be an interim measure, and the UK government agreed in 2021 to phase it out, averting the threat of retaliatory tariffs on British products from the US.
The tax was meant to be replaced in 2024 with a new global system after the Organization for Economic Cooperation and Development (OECD) brokered a deal between 140 countries, including the UK, that proposed large multinational companies paying tax in the countries where they do business committed themselves to a minimum 15% corporation tax rate. Implementation has been beset with delays as a number of countries have continued to raise objections over the regime.
Trump's tariff threat comes after he has lashed out at Starmer—and other European officials—in recent weeks over their limited support for his illegal war on Iran. The US leader suggested to the BBC this week that he and the UK prime minister could only "recover" if the Labour leader embraced stricter immigration policies and "opened the North Sea" to the fossil fuel industry.
"I'm here to serve the British people always, to have their interests and to make sure that I make the right decisions for them," Starmer told the British broadcaster. "That is why I took the decision that we would not be dragged into the war in Iran."
