Tariffs as bargaining chips
- President Donald Trump said on April 24 he would “probably put a big tariff” on the U.K. unless Prime Minister Keir Starmer’s government drops Britain’s digital services tax on U.S. tech groups. - The same week, Trump’s administration offered Canadian and Mexican steel and aluminum producers immediate tariff relief if they pledge future production expansion in the United States, after metal duties climbed as high as 50%. - The two moves show tariffs being used to press allies on taxes and factory siting, not only import protection. (cnbc.com)
President Donald Trump said on April 24 he would “probably put a big tariff” on the United Kingdom if Britain keeps its digital services tax. (cnbc.com) Trump made the threat from the Oval Office, where he said Britain was trying to make “an easy buck” from American tech companies. CNBC reported the tax applies at 2% to revenue tied to U.K. users of search engines, social media services and online marketplaces. (cnbc.com) The U.K. tax has been in force since April 1, 2020, and applies to groups with more than £500 million in global in-scope revenue and more than £25 million tied to U.K. users. The first £25 million of U.K. user revenue is exempt. (gov.uk) CNBC said Britain’s Labour government has defended the levy as a revenue source after it raised about £800 million in the 2024-25 financial year. Bloomberg Law reported this week that digital services tax receipts reached £944 million in 2025-26. (cnbc.com) (news.bloomberglaw.com) At the same time, the Trump administration published a notice offering Canadian and Mexican steel and aluminum companies immediate tariff relief if they commit to moving production to the United States in the future. CBC reported the offer was posted on Thursday, April 23. (cbc.ca) That offer arrived after Trump’s April 2 proclamation tightened section 232 metal tariffs. PwC said the revised structure took effect April 6 and generally applies 50% tariffs to core steel, aluminum and copper articles, while some derivative goods face 25%. (pwc.com) CBC said Canadian officials have been trying to restart formal talks on sectoral tariff relief, while Prime Minister Mark Carney called Trump’s sectoral tariffs a violation of North America’s free trade deal ahead of a July review. (cbc.ca) The two actions point in the same direction: tariffs are being used as leverage over policies outside the border itself. In one case, the target is a tax set by a U.S. ally; in the other, the condition is where future factory capacity gets built. (cnbc.com) (cbc.ca) Britain has said the long-term answer to digital taxation is an international deal through the Organisation for Economic Co-operation and Development, and its policy paper says the tax would be removed once a broader solution is in place. For now, Trump is treating that levy as a tariff issue too. (gov.uk)
