Trump decree

Countries with digital tax face retaliatory tariffs

Austria has also been levying a digital tax since 2020.(Bild: Oulaphone - stock.adobe.com)

US President Donald Trump is reviewing the introduction of tariffs on imports from countries that levy digital service taxes on US technology companies. These taxes, which target dominant tech giants such as Google, Facebook, Apple and Amazon, have long been a source of annoyance for US governments.

Austria has been levying a digital tax since 2020, and its increase was a topic of discussion in the coalition negotiations with a view to balancing the budget. Trump has now signed a memorandum instructing his administration to consider countermeasures such as tariffs "to combat the digital services taxes, fines, practices and policies that foreign governments are imposing on American companies", according to a spokesperson. "What they're doing to us in other countries with digital is terrible," Trump told journalists.

Paving the way for retaliatory tariffs
The UK, France, Italy, Spain, Turkey, India and Canada - like Austria - have imposed these taxes on sales from large digital service providers within their borders. During Trump's first term, the Trade Representative launched investigations into unfair trade practices against several of these countries. They were found to be discriminating against US companies, which paved the way for retaliatory tariffs on certain imports.

The previous US administration had already threatened retaliatory tariffs. Until last year, however, there was an agreement with Austria, England, France, Italy and Spain to suspend the retaliatory measures in order to allow more time for negotiations on international taxation rights for large, highly profitable companies.

Digital tax brought Austria around 100 million euros
In Austria, the digital tax brought in around 100 million euros in 2023. It is aimed at advertising on the internet, which is not affected by the advertising tax. Companies that generate at least 25 million euros in revenue from online advertising services in Austria and generate global revenue of at least 750 million euros are affected. The tax rate is five percent. In the course of the current coalition negotiations, an extension of the digital tax was also discussed with a view to budget restructuring.

Trump had previously announced retaliatory measures and said that he would impose tariffs on goods from Canada and France due to their digital services taxes. According to a White House fact sheet, both countries generated over 500 million dollars a year in revenue from these taxes, with global levies amounting to over two billion dollars.

Trump's memorandum also directs an investigation into how US companies are treated under the Digital Markets Act and the EU's Digital Services Act.