Donald Trump threatens Britain with all-new tariffs over 'cash grab' tax on American firms

President Donald Trump has threatened to slap Britain with all-new tariffs if it does not drop its "cash grab" tax on American companies.

The digital services tax - which came into effect in 2020 - imposes a two per cent levy on the revenues of a number of major US tech companies.

It was introduced by the Conservatives to address the large gap between the revenue being generated by British users for the social media firms compared to the amount of tax being paid to the Government.

On Thursday, Mr Trump threatened to impose a "big tariff" on Britain if Labour does not scrap the measure.

He told reporters at the Oval Office: “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.”

The levy impacts tech firms whose worldwide revenues from exceeds £500million, with more than £25million of the revenues from British users of their digital services.

The tax has been a point of friction between the US and Britain since it was introduced six years ago - with critics blasting it as a "cash grab" at the time.

The President said the levy specifically targeted the “top companies in the world”.

Mr Trump told reporters: “The UK did it, a couple of other people did it.

“They think they’re going to make an easy buck, that’s why they’ve all taken advantage of our country.”

Despite being a point of discussion during negotiations for the UK-US trade deal agreed in May 2025, the digital services tax went unchanged.

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When probed about how high the prospective tariff on Britain could be, Mr Trump said it would be “more than what they’re getting” from the tax.

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

Britain is not the only country with a similar measure in place, with European countries such as France, Italy and Spain all enforcing their own digital services tax.

Mr Trump has previously vowed to “stand up to countries that attack our incredible American tech companies”.

In August, the President wrote on his Truth Social platform: “Digital taxes, digital services legislation, and digital markets regulations are all designed to harm, or discriminate against, American technology."

He warned that “unless these discriminatory actions are removed”, the US would move to “impose substantial additional tariffs” on the countries involved.

In the 2024/25 financial year, the Government collected around £800million from the digital services tax.

If the levy remains in place, it is projected to generate between £4.4billion and £5.2billion in revenue between 2024 and 2029.

A Treasury review into the DST last November outlines how ministers think reforming the international tax framework is the "most sustainable long-term solution" and are "committed to leading efforts to create a system suited to the digital era".

"In the meantime, DST continues to operate as an interim measure to ensure that digital businesses make a contribution that reflects their economic activities in the UK," it says.

GB News has approached the Treasury and the Department for Business and Trade for comment following Mr Trump's remarks last night.

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