US President Donald Trump threatened a 100% tariff on all goods from any country that imposes a digital services tax on American companies on June 26, escalating transatlantic trade tensions a day after EU nations met his July 4 deadline to cut tariffs on US goods.

Key Highlights

• Trump announced via Truth Social that any country implementing a digital services tax would face an immediate 100% tariff on all goods exported to the United States, stating the measure would supersede any existing trade deal whether implemented, signed, or not.

• More than a dozen countries have imposed digital services taxes, which are typically structured to apply only to the world's largest technology companies, including Meta, Alphabet, and Amazon.

• The Supreme Court previously struck down Trump's global reciprocal tariffs, ruling that the International Emergency Economic Powers Act does not authorize such sweeping unilateral measures, leaving the legal basis for this latest threat unclear.

• France has applied a 3% digital services levy since 2019 on large technology companies earning revenue in the country, and French lawmakers proposed doubling the rate to 6% last year.

Trump's June 26 announcement introduces a significant escalation in the long-running dispute between the United States and European countries over digital services taxes. The warning states the 100% tariff would supersede existing trade agreements, directly threatening the US-EU deal reached last year under which Washington agreed to cap tariffs on European goods at 15% in exchange for Europe eliminating tariffs on US industrial goods. EU lawmakers scrambled in recent weeks to meet Trump's July 4 implementation deadline for their side of that agreement, meeting it just one day before the new tariff threat landed.

The legal pathway for the threatened tariffs remains uncertain. The Supreme Court ruled earlier this year that the International Emergency Economic Powers Act, the statute Trump used to justify his sweeping global reciprocal tariffs, does not authorize such unilateral measures. Hours after that ruling, Trump signed an executive order imposing a new 10% global tariff under Section 122 of the Trade Act of 1974. However, that statute limits tariffs to 150 days, with any extension requiring congressional approval. It remains unclear which legal authority the administration would invoke to impose the threatened 100% digital services tax tariffs.

The Canada precedent offers a reference point. Trump previously threatened to cut off all trade negotiations with Ottawa over its proposed digital services tax, and Canada subsequently scrapped the levy before it took effect. European governments now face a similar calculation, though the political environment is more complex. France's president stated ahead of last week's G7 summit that the country would not bow to US pressure and eliminate its digital tax, drawing a direct warning from Trump about 100% tariffs on French wine.

Digital services taxes are structurally designed to target only the largest and most established technology platforms. France's 3% levy applies to companies with global revenues above approximately $854 million and meaningful revenue in France, putting US-domiciled firms including Meta, Alphabet, and Amazon squarely in scope. The US Trade Representative has long argued that such taxes are discriminatory precisely because American companies dominate the sector globally, and has periodically threatened retaliatory measures against France, the UK, Austria, Spain, and others.