The US President has threatened to impose a 100% import tariff on any country that introduces a digital services tax on America's technology giants.
The president made the statement on his social media platform, warning that the penalties would take effect immediately and would entirely 'supersede' any existing bilateral trade agreements.
The threat is aimed squarely at nations planning the 'imminent implementation' of new levies, but the implications for the UK are far from clear.
London has had a digital services tax on the books since 2020, which applies to major search engines, social media platforms and online marketplaces with worldwide revenues from their digital businesses topping £500 million and total UK revenues above £25 million.
The UK's 2% Digital Services Tax raises more than £800 million in a year, making it a useful and growing source of revenue for the Exchequer.
The tax has long been a source of irritation in Washington, with the US President previously warning that the UK faced a 'big tariff' for what he characterised as targeting major American companies.
The threat lands just days after the US and EU finalised a new trade deal, and the timing is unlikely to be coincidental.
Several other EU member states have implemented or proposed similar measures to the UK's digital services tax, with France, Italy and Spain each levying a 3% tax on large companies operating within their borders.
The US President has a history of imposing sweeping tariffs on trading partners, although his previous attempts have met with mixed success.
The stakes are considerable for British firms, with US tariffs on UK goods having already climbed sharply over the past year.
A 100% duty triggered by the digital services tax would dwarf anything seen so far, and ministers now face an uncomfortable choice between defending a levy worth the better part of £1 billion a year and shielding exporters from a potential tariff shock.
