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Politics

Trump's New Trade War: This Time It's Digital

Trump's New Trade War: This Time It's Digital
Photo: Midjourney

The gloves are coming off in the digital tax arena. President Trump has ordered his trade team to dust off their old playbooks and potentially slap tariffs on countries that dare tax American tech giants. It's like déjà vu, but with more zeros in the dollar amounts.

SAN FRANCISCO, Feb 21 - Britain, France, Italy, Spain, Turkey, India, Austria, and Canada have been collecting hefty digital service taxes from U.S. tech behemoths like Google, Meta, and Amazon. These countries have collectively raked in over $2 billion annually - a number that apparently made Trump's tariff trigger finger itchy. France and Canada alone collect over $500 million each year, which probably explains why they made Trump's naughty list.

The president's latest memo reads like a greatest hits album of his first term's trade policies. It calls for reviving previous investigations and launching new ones against countries that "appropriate America's tax base." In Trump's view, if anyone's going to tax American tech companies, it should be America.

Trump's trade chief has a fresh mandate to investigate not just digital taxes, but also any foreign policies that might make U.S. tech companies uncomfortable. It's a broad brush that could paint quite a few trading partners into a corner. The EU's Digital Markets Act and Digital Services Act are particularly in the crosshairs, with special scrutiny promised for any policies that might "undermine free speech or foster censorship."

The timing is interesting, coming just as Trump tries to cozy up to Silicon Valley. He met on Thursday with Apple's Tim Cook, discussing potential investments that would make American manufacturing "great again" - or at least more prevalent. This follows a pattern of Trump's administration trying to position itself as Big Tech's unlikely defender on the global stage.

Previous attempts at solving this issue through diplomacy haven't exactly been a roaring success. The Biden administration's 25% tariffs on $2 billion worth of imports from six countries were suspended to allow for negotiations. Those talks led to a 15% global corporate minimum tax that Congress never ratified. Now Trump's back, and he's made it clear he prefers the stick to the carrot.

Why this matters:

  • The global tax landscape is turning into a game of chicken - with the world's largest economy holding a very big stick
  • This could either force a reset of international digital tax policies or trigger a cascade of retaliatory tariffs that would make online shopping more expensive than a Silicon Valley startup's burn rate
  • Silicon Valley might have found an unlikely champion in Trump, who's essentially telling the world: "Nobody puts Baby in a corner" - except, in this case, Baby is worth trillions and has more data than the Library of Congress

Read on, my dear:

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