Currently, the UK is impacted by Trump’s 25% tariffs on all imports of steel and aluminium into the US. Washington has also implemented tariffs against Canada, Mexico and China.
UK Chancellor of the Exchequer Rachel Reeves has hinted that taxes on large tech companies could potentially be changed in an attempt to avoid upcoming US tariffs.
Although talks are still being held, changes may be applied to the Digital Services Tax (DST), which could impact major tech companies such as Meta and Amazon.
Currently, the DST is set at 2% and rakes in around £800 million (€957.3m) annually for the UK. However, it could possibly be changed in order to encourage the US not to implement additional tariffs on the UK.
“We’ve got to get the balance right, and those discussions at the moment are ongoing. We want to make progress. We do not want to see British exporters subject to higher tariffs. I want to preserve free and open trade,” Reeves told the BBC in a TV interview.
This move has been significantly criticised by Liberal Democrats already, who have slammed the UK government for slashing public sector jobs and disability benefits, while offering handouts in the form of tax cuts to large tech companies. Instead, the Liberal Democrats are advocating for the DST to be hiked to 6%.
Global tariff tensions escalate
US President Donald Trump has already announced 25% tariffs against key trading partners Canada and Mexico, along with 20% tariffs on China. The next raft of US tariffs is expected to be announced on 2 April.
Trump has also imposed a 25% on all steel and aluminium imports to the US, which also significantly impacts the UK. Initially, the EU reacted swiftly to this announcement by saying that it would impose tariffs on US exports worth up to €26 billion.
Tensions escalated further as Brussels revealed that it may implement a 50% levy on US whiskey, which Trump quickly countered with the threat of a 200% tariff on European champagne, wine and spirits.
However, the bloc later announced that it would be delaying its countermeasures till mid-April, providing more time for negotiations and a more favourable outcome between the two parties.
Trump has revealed that he believes tariffs will boost the US economy by encouraging domestic firms to use domestic labour and suppliers.
However, experts have pointed out that it could be difficult to achieve this, as companies would have to significantly ramp up their supply chains.
Source: Euro News
