US President Donald Trump has warned that countries imposing digital services taxes on American companies could face steep trade penalties, including a 100 per cent tariff on goods exported to the United States.
In a post on Truth Social, Trump wrote, "Any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America."
He further said that "this TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not".
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The warning reflects the long-standing opposition of the Trump administration to digital services taxes, which it argues unfairly target major US technology companies.
Why India may avoid the impact
India is unlikely to be affected by the proposed measure as it has already withdrawn both components of its Equalisation Levy, often referred to as the "Google Tax", reported Hindustan Times.
The levy was introduced in 2016 and imposed a 6 per cent tax on payments made to non-resident digital companies for online advertising services. The measure applied to foreign technology firms earning advertising revenue from Indian businesses even without a physical presence in the country.
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The government later removed the 2 per cent Equalisation Levy on non-resident e-commerce operators through the Finance Act, 2024. The levy on digital advertising services was also abolished through changes introduced in the Finance Bill, 2025, effective from April 1, 2025.
Government officials had earlier indicated that removing the tax could help ease trade tensions with the United States.
European countries in focus
The proposed tariffs are expected to affect several European countries that continue to impose digital services taxes, per a report by Hindustan Times.
Trump has repeatedly argued that such taxes create barriers for American companies, particularly major technology firms, including Alphabet and Meta.
France remains one of the prominent examples. The country introduced a 3 per cent digital tax in 2019 on revenues earned by technology companies operating in the country.
Following Trump's latest remarks, the European Union said it would "respond swiftly and decisively to defend its rights and regulatory autonomy."
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The US Trade Representative's office has previously warned countries including France, Britain, Austria and Spain about possible retaliatory tariffs over digital services taxes.
FAQs:
Will Trump's tariff threat affect India?
India is unlikely to be affected as it has already withdrawn its Equalisation Levy.
Which countries could face Trump's proposed tariffs?
Several European countries with digital services taxes could face retaliatory measures.
