Lock the White House Watch Newsletter for free
Your Guide to Washington and the World’s 2024 US Election Means
UK Secretary of Business Jonathan Reynolds will try to avoid the threat of waving US tariffs on Tuesday, but the UK’s digital services tax remains a major source of information about the fight with the Trump administration.
Reynolds will hold talks in Washington to seek UK exemptions from Donald Trump’s global “mutual” tariffs scheduled for early April, but talks on new UK/US economic transactions are underway.
However, the US President argues that the digital services tax imposed by the UK, along with the EU and other countries, is a collection targeted by the US technology giants and should meet strict tariffs.
“There is no proposal to make any changes to our digital services tax,” he said, referring to the collection introduced in the UK in 2020, and is projected to raise £800 million from 2024-25.
Some British officials hope that Reynolds will be able to persuade his US counterparts to give him special treatment to Britain.
He meets US Secretary Howard Lutnick and US trade representative Jamieson Greer, who argues that transatlantic commercial relations “had benefited both sides for decades.”
Reynolds said: “Today’s visit to Washington, D.C. is the latest step in practical and positive engagement with the new administration to agree to a broader economic transaction in both our interests.”
British officials say that economic transactions focusing on close cooperation between technology and artificial intelligence provide the basis for a “technical partnership” between the two parties.
“The roads are paved for a swift agreement on tariffs and long-term technology partnerships. The US side is requesting, but we want to demonstrate that our allies can negotiate with them.
Keir Starmer’s government did not retaliate with mutual measures when the US imposed a 25% global tariff on steel and aluminum imports.
Reynolds hopes that what’s called “cool head response” will earn him some credit in Washington. The EU quickly responded to US collections with anti-abuse tax on Totemy’s US products, including bourbons, motorcycles and jeans.
Those familiar with U.S. administration’s consultation with the UK say that the UK’s digital tax is the main trade issue cited as a stimulant, as the Trump administration is working to calculate the rate of “mutual” tariffs on its main trading partners.
The UK introduced the Digital Services Tax in April 2020. This was collected 2% on revenues from search engines, social media platforms and online markets that earn value from UK users.
The tax was introduced to address concerns that large tech companies are declaring low profits in the UK by transferring profits made in the UK to other countries with lower tax rates.
Under the last Trump administration, the US threatened to impose tariffs on the UK, and other countries threatened to retaliate taxes on tech companies.
In late February, Trump signed an executive order instructing Greer to resume probes intended to impose tariffs on several countries that impose DST on US platforms, including the UK, Canada and France.
