Just as the EU adopted legislation to effectively remove import duties on many US goods, fulfilling its side of the EU-US trade deal reached on July 27, 2025, US President Donald Trump threatened to impose new tariffs on any EU country that imposes a Digital Services Tax (DST) targeting US tech companies. Notably, the US President underlined that the new tariff would supersede any trade deals. 

Threat of New Tariffs and the EU's Response

The US President announced that if any EU country introduces DST, the US will immediately impose a 100% tariff on all goods exported to the US. Given that President Trump stated that such tariffs would supersede any trade deals with the US, regardless of whether existing deals have been signed or are in force, new 100% tariffs would negate last year's EU-US trade deal.

Last week, President Trump stated that if France does not repeal its DST, the US would have no other choice but to apply 100% tariffs. The French 3% DST was challenged before the national Constitutional Court which, last September, upheld the application of the DST and rejected the challenge brought by Digital Classifieds France. Italy is another EU country that has implemented a 3% DST, a position the US government also opposes, claiming the tax discriminates against US companies.

While President Trump explicitly stated that new 100% tariffs will apply to EU countries, he made no mention of the UK's 2% DST on social media platforms, large search engines, and online marketplaces. The UK DST was also not mentioned in the UK-US trade deal signed on May 8, 2025.

In response to President Trump's threats, Olof Gill, a spokesperson for the European Commission, said the EU has sovereign authority to create and enforce rules governing economic activity within the EU, including digital taxation policies. Moreover, Gill stated that any unilateral actions by other countries against these policies would be unjustified and warned that the EU would react quickly and firmly to protect its legal rights and its ability to regulate independently.

Gill also added that the European Commission still prefers an internationally coordinated approach to taxing the digital economy rather than separate national measures, and that the EU remains willing to work constructively with international partners to achieve a common solution.

Conclusion

The DST has been a point of disagreement between the US and the EU for some time. However, it seems that the tension could evolve into a new trade war between the world's two largest economies. Whether the issue will further escalate depends on how seriously President Trump pursues 100% tariffs on all imports from EU countries, and how the EU responds to protect its members.