[CTC] Navarro: US still negotiating on UK's digital services tax

Mon May 12 12:13:43 PDT 2025

*Navarro: US still negotiating on UK's digital services tax*

Ari Hawkins and Doug Palmer, PoliticoPro

5/8/25

White House trade adviser Peter Navarro said Thursday that the Trump
administration is still pressing the United Kingdom to lift its tax on
digital services, calling it a “bad virus.”

“We’re still in negotiations,” Navarro told reporters at the White House,
after the president unveiled the framework for a trade deal with the U.K.
that did not address the issue. “That’s a very big deal to President
Trump.” The president and other top White House officials acknowledged in
remarks on the deal in the Oval Office Thursday
<https://subscriber.politicopro.com/article/2025/05/trump-announces-very-large-trade-deal-with-uk-final-details-tbd-pro-00335534>
that
many of the details have yet to be ironed out, especially on the most
contentious trade disputes between the two countries.

“Digital taxes has spread like a bad virus around the world, but it started
in Europe, and it basically targets American companies, I can say it in no
other way,” Navarro added.

U.S. presidents of both parties have long taken issue with taxes imposed by
foreign governments on large technology companies, arguing they
discriminate against American firms like Amazon, Facebook, Meta and Google.

But the new agreement Trump hailed Thursday punts on that dispute, as well
as several other particularly divisive issues like potential U.S. tariffs
on pharmaceuticals.

The U.K.'s 2 percent digital service tax — which hits companies that earn
more than $662.37 million globally and over $33.12 million from U.K. users
— has been a sticking point in the talks. The tax was imposed in 2020 and
targets the revenues of search engines, online marketplaces and social
media services worldwide.

Pro-trade groups in the U.S. celebrated the framework agreement Trump and
British Prime Minister Keir Starmer rolled out Thursday, but also expressed
frustration that the digital services issue remains unresolved.

Jake Colvin, president of the National Foreign Trade Council, which
represents major U.S. exporters, said in a statement
<https://www.nftc.org/nftc-statement-on-u-s-uk-trade-deal/> that it would
be “extremely disappointing if the U.K. doesn’t use this opportunity to
address key trade irritants such as its digital services tax, which is a
discriminatory policy that disproportionately targets U.S. companies.”

A British official, who was granted anonymity to brief reporters on the
negotiations, acknowledged the Trump administration pressed the U.K.
government to get rid of the DST or at least reduce or restructure it.

The official added that he wouldn’t be surprised if the United States
continues to make that demand “but there’s no agreed process or procedure
governing that.”

Other countries such as France and Italy have also implemented digital
service taxes that hit American tech giants.

The deal announced Thursday also keeps Trump’s new 10 percent “baseline”
tariff in place on U.K. goods, although it provided some relief from the 25
percent tariffs that the president imposed on autos and auto parts as well
as steel and aluminum.

It allows the U.K. to export 100,000 autos to the United States each year
at a 10 percent duty rate and then at a 27.5 percent rate after that.
That’s compared to the 2.5 percent rate that the U.K. and other countries
faced before Trump imposed his auto tariffs.

As part of the deal, the U.S. will also lift Trump’s 25 percent steel and
aluminum tariffs and replace it with an “alternative arrangement” to be
negotiated. The British official said that means establishing a quota that
lets British steel enter the U.S. at a “most-favored nation” tariff rate.

The U.K.’s goals for ongoing talks on a bigger trade package with the U.S.
include ensuring it is not hit by new sectoral tariffs, such as ones Trump
has proposed for pharmaceuticals, the British official said.

It also wants to negotiate “across the waterfront” to try to bring down
Trump’s baseline tariff of 10 percent for as many products as possible and
to further develop the idea of creating a high-level “technology
partnership” with the United States, the official said.

*A warning for Europe: *Speaking to reporters outside the White House,
Navarro also blasted the European Union’s release Thursday of a list of roughly
$112 billion of American imports
<https://www.politico.eu/article/eu-ready-fresh-100-billion-counterstrike-donald-trump-tariffs/>
it
could target for retaliatory tariffs, if the 27-country bloc does not reach
agreement with Trump before steep tariffs on EU goods go into effect on
July 9.

"Any country which retaliates against the United States, which is simply
trying to get fairness, is making a grave mistake," Navarro said. "For them
to publish stuff like that, I don't think it's in the interest or the
spirit of negotiations that are going to be as effective as they otherwise
would."

Trump, however, praised European Commission President Ursula von der Leyen
<https://www.politico.eu/article/donald-trump-ursula-von-der-leyen-bloc-meeting/>
when
answering questions in the White House earlier in the day. “She’s so
fantastic,” the president said twice. “I hope we’re gonna meet.
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