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Digital service taxes a longstanding trade irritant for US

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Countries including France, Canada, UK have DSTs

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White House says it will scrutinize EU tech regulations

(Adds details from White House fact sheet and background

throughout)

By Nandita Bose, David Lawder and Steve Holland

WASHINGTON, Feb 21 (Reuters) - President Donald Trump on

Friday ordered his trade chief to revive investigations aimed at

imposing tariffs on imports from countries that levy digital

service taxes on U.S. technology companies.

A White House official, providing details of the order, said

Trump was directing his administration to consider responsive

actions like tariffs "to combat the digital service taxes

(DSTs), fines, practices, and policies that foreign governments

levy on American companies."

"President Trump will not allow foreign governments to

appropriate America's tax base for their own benefit," the

official said.

The memo directs the U.S. Trade Representative's office

to renew digital service taxes investigations that were

initiated during Trump's first term, and investigate any

additional countries that use a digital tax "to discriminate

against U.S. companies," according to a White House fact sheet.

The digital service taxes aimed at dominant U.S. tech giants

including Alphabet's Google, Meta's Facebook,

Apple ( AAPL ) and Amazon ( AMZN ) have been a longstanding

trade irritant for multiple U.S. administrations.

Britain, France, Italy, Spain, Turkey, India, Austria

and Canada have levied the taxes on sales revenue by these and

other digital services providers within their borders.

During Trump's first term, USTR launched Section 301

unfair trade practices against several of these countries,

finding they discriminated against U.S. companies, paving the

way for retaliatory tariffs on certain imports.

"What they're doing to us in other countries is terrible

with digital," Trump told reporters ahead of his memo signing.

He previewed the action last week, saying that he would

impose tariffs on goods from Canada and France over their

digital service taxes. A White House fact sheet released at the

time said each had collected over $500 million annually in DST

revenues, with global levies at over $2 billion.

Trump's memo also directs his administration to review

whether any policy in the European Union or Britain

"incentivizes U.S. companies to develop or use products and

technology in ways that undermine free speech or foster

censorship."

The White House fact sheet said that it will especially

scrutinize how U.S. firms are treated under the EU's Digital

Markets Act and Digital Services Act.

Sources told Reuters earlier on Friday that Google is

set to be charged with breaching the Digital Markets Act after

proposed changes to its search results failed to address the EU

antitrust regulator's concerns and those of its rivals.

BATON PASS

After Trump's first administration launched the digital tax

probes, former President Joe Biden's trade chief, Katherine Tai,

in 2021 followed up by announcing 25% tariffs on over $2 billion

worth of imports from six countries, but immediately suspended

them to allow negotiations on a global tax deal to continue.

Those negotiations led to a 15% global corporate minimum tax

that the U.S. Congress never ratified. Talks on a second

component, meant to create an alternative to the digital taxes,

have largely ground to a halt with no agreement.

Trump on his first day in office effectively pulled the U.S.

out of the global tax arrangement with nearly 140 countries,

declaring that the 15% global minimum tax has "no force or

effect in the United States" and ordering the U.S. Treasury to

prepare options for "protective measures."

Trump did not disclose how high a tariff rate he would

charge on the retaliatory duties, nor the value of goods

targeted.

In 2021, Tai announced that USTR would impose 25% tariffs on

about $887 million worth of goods from Britain, including

clothing, footwear and cosmetics, and on about $386 million

worth of goods from Italy, including clothing, handbags and

optical lenses.

USTR said at the time it would impose tariffs on goods worth

$323 million from Spain, $310 million from Turkey, $118 million

from India and $65 million from Austria. USTR separately

suspended tariffs on $1.3 billion worth of French cosmetics,

handbags and other goods.