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 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 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 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 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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