Trump Threatens to Impose ‘Major Tariff’ on UK

(SeaPRwire) –   U.S. President Donald Trump has threatened to enact a “major tariff” on the United Kingdom unless the country scraps its digital services tax targeting American tech firms.

“They believe they can score an easy profit, and that’s how they’ve taken advantage of our nation,” Trump stated late Thursday. “We’ve examined this issue, and we can easily counter this by imposing a major tariff on the U.K.” 

First implemented in 2020, the digital services tax levies a 2% charge on the annual revenues of several large U.S.-based companies.

Citing his “duty to safeguard” American businesses, the president doubled down on his threat, warning the UK government to exercise caution, noting “if they do not repeal the tax… we will respond with a measure that matches or exceeds the scale of their policy.”

Downing Street released a defiant statement Friday morning, confirming its stance on the tax has not shifted.

“Our position on this matter remains unchanged. This is an extremely important tax that ensures these businesses contribute their fair share, making it a fair and balanced approach to taxing commercial activities conducted within the U.K.,” a Downing Street spokesperson told TIME.

Trump’s threat to use economic leverage to achieve his desired outcome marks the latest sign that the so-called “special” relationship between the U.K. and U.S. has fractured dramatically since the outbreak of the Iran conflict.

Just one week prior, Trump warned that the U.K.-U.S. trade agreement finalized in 2025—once hailed for its “reciprocity and fairness”—could be altered.

“Things have been better, but this is disheartening,” he remarked of the worsening bilateral relationship. “We offered them a strong trade deal, more favorable than I was obligated to provide, and that agreement can always be revised.”

Trump has repeatedly criticized British Prime Minister Keir Starmer for declining to take an active role in the Iran conflict. He condemned Starmer’s initial refusal to allow U.S. forces access to British military bases at the onset of the war, arguing this delayed American troops and cost them critical time.

He has also continued to condemn the U.K.’s handling of the Chagos Islands agreement, and labeled NATO allies “useless” after they declined to deploy warships to secure the Strait of Hormuz.

In response, Starmer recently stated he was “frustrated beyond measure” by U.K. citizens facing economic instability caused by Trump’s actions during the conflict, whose aftereffects have sparked a global energy crisis.

As transatlantic relations between Europe and the U.S. face severe strain, the Pentagon is reportedly weighing multiple options to penalize U.S. allies that have exercised restraint rather than intervening directly in the war. According to Reuters, a U.S. official referenced a Pentagon internal email where senior officials were reviewing the U.S.’s stance on the U.K.’s territorial claim over the Falkland Islands. 

TIME has not been able to independently confirm that email, and has contacted the Pentagon to request comment.

Responding to these reports, a Downing Street spokesperson told TIME: “An overwhelming majority of voters in the Falkland Islands have cast their ballots in favor of remaining a U.K. overseas territory, and we have always stood by the islanders’ right to self-determination, as well as the principle that sovereignty lies with the U.K.” 

They added: “We have clearly and consistently communicated this stance to every consecutive U.S. administration, and this position will not shift.”

Stephen Doughty, the U.K.’s Minister of State for Europe, North America and Overseas Territories, also released a defiant statement, insisting: “The Falkland Islands are British.”

These recent threats toward the U.K. come just days before King Charles III and Queen Camilla are scheduled to conduct their highly anticipated state visit to the U.S., where Trump will host them for a formal banquet dinner at the White House.

This will mark the first U.S. state visit by a British monarch since Queen Elizabeth II was welcomed by President George W. Bush in 2007, and the stakes are clearly high, as the visit could present an opportunity to de-escalate the growing tensions between the U.K. and U.S.

Here is what you need to know about the tax Trump is criticizing, as well as the current state of U.K.-U.S. bilateral relations.

What is the digital services tax?

First introduced by the prior U.K. government in April 2020, the digital services tax levies a 2% charge on the revenues of “search engines, social media platforms and online marketplaces that generate value from U.K. users.”

The initial £25 million ($33.7 million) in revenue these companies earn from U.K. users is exempt from this tax. 

From April 2021 to April 2025, the tax generated more than £2.4 billion ($3.2 billion) in revenue for the U.K. government.

A 2022 audit of the tax conducted by the U.K. National Audit Office found that during the tax’s first full year of operation, roughly 90% of total revenue came from just five companies, with 18 businesses paying the levy overall that year.

Trump has previously spoken out against a comparable digital services tax implemented by Canada during a bilateral trade dispute between the two nations. In June 2025, the president announced he would be “ending all trade talks” with Ottawa over the tax. 

The Canadian government subsequently announced it would repeal the tax “in preparation for a comprehensive trade agreement with the U.S. that benefits both parties.”

That tax, which was formally repealed last month, imposed a 3% charge on revenues matching those targeted by the U.K.’s digital services tax. 

Can King Charles’ state visit to D.C. save the “special” U.K.-U.S. relationship?

With the British royal couple’s visit mere days away, Trump has framed his meeting with King Charles and Queen Camilla as a chance to rebuild a stronger bilateral bond between London and Washington. 

When asked whether the royal visit could help mend the historically close bilateral relationship, Trump stated: “Absolutely, the answer is yes.”

Praising the royal family, a group he has long admired, Trump described Charles as “a wonderful man, a courageous man.”

Trump traveled to meet the King and Queen last September during his unprecedented second state visit to the U.K., where he stayed at Windsor Castle and participated in multiple events alongside Charles. 

During that trip, the president also met with Starmer at his official country residence, Chequers, where the two leaders signed a “groundbreaking” billion-dollar technology and economic partnership deal.