White House Targets Digital Trade Taxes

Lat week President Trump signed a directive aimed at protecting American companies from foreign-imposed taxes, fines, and regulatory restrictions, vowing to take retaliatory action against governments that unfairly target U.S. businesses.

The Presidential Memorandum, titled Defending American Companies and Innovators From Overseas Extortion and Unfair Fines and Penalties, outlines the administration’s commitment to countering digital services taxes (DSTs) and other financial measures that disproportionately affect U.S. technology firms.

These foreign policies, the administration argues, amount to economic extortion that drains billions from American businesses and undermines the nation’s economic and technological dominance.

"Extortive Fines and Taxes"

“American businesses will no longer prop up failed foreign economies through extortive fines and taxes,” the memorandum states. The administration contends that DSTs—which impose taxes on American digital companies simply for operating in foreign markets—are an attempt by foreign governments to appropriate U.S. tax revenue for their own benefit.

The White House has directed the United States Trade Representative (USTR) to renew Section 301 investigationsinto DSTs imposed by France, Austria, Italy, Spain, Turkey, and the United Kingdom, first initiated in President Trump’s first term.

The administration will also examine Canada’s DST under the United States-Mexico-Canada Agreement (USMCA) and investigate whether other countries have implemented similar discriminatory tax policies.

Scrutinizing Foreign Regulations

The memorandum extends beyond taxation, targeting foreign regulations that restrict U.S. businesses’ operations. The administration has identified European Union policies, such as the Digital Markets Act and the Digital Services Act, as particularly problematic. These laws, the White House argues, impose regulatory burdens on U.S. companies while favoring domestic European firms.

The administration will also review whether EU and U.K. policies coerce American businesses into moderating content, potentially undermining free speech and political engagement.

 Innovation and Intellectual Property

The memorandum asserts that foreign governments have enacted policies that pressure American businesses into surrendering intellectual property. The administration warns that countries attempting to force technology transfers or extract proprietary business information will face U.S. countermeasures.

“Rather than position their own companies and workers for success, foreign governments have been taxing the success of America’s companies and workers,” the Fact Sheet released alongside the memorandum states. The administration argues that foreign nations should develop their own industries instead of exploiting American economic leadership.

Tariffs and Retaliatory Actions

To counter these practices, President Trump has made it clear that his administration will consider a range of punitive economic measures, including tariffs and trade restrictions. The USTR, Treasury Department, and Department of Commerce have been directed to identify discriminatory foreign practices and recommend responsive actions.

Additionally, the administration will work to establish a permanent moratorium on customs duties on electronic transmissions, ensuring that American companies are not subjected to additional financial burdens when conducting international business.

A Continuation of “America First” Trade Policy

President Trump’s latest trade directive builds on his first-term policies, which saw the use of tariffs, Section 301 investigations, and digital trade agreements to push back against foreign economic policies deemed unfair to U.S. businesses.

The administration is also linking this new effort to its recently announced Fair and Reciprocal Trade Plan, which seeks to restore fairness in U.S. trade relationships and counter non-reciprocal trade agreements.

“This is about restoring the entrepreneurial spirit of America,” the Fact Sheet states.

Federal Register Notice:

U.S. Companies and Innovators; Efforts To Defend From Overseas Extortion and Unfair Fines and Penalties (Memorandum of February 21, 2025)