Trump threatens UK with 'big tariff' if PM Keir Starmer doesn't scrap one policy

Donald Trump has once again gone full send on the UK, threatening to slap a massive tariff on British goods unless Prime Minister Keir Starmer drops one tax the country holds on American tech giants.

Speaking from the Oval Office on Thursday, Trump made it clear there will be no more Mr Nice Guy.

The UK introduced a 2 percent digital services tax rate back in 2020, but what exactly is it?

The UK's digital service tax, or DST, hits major US tech companies with a two percent levy on the revenues they generate from UK users.

For this tax to apply, the company needs to be earning around $673 million worldwide, with at least £25 million of that coming from Great Britain.

Donald Trump is once again angry with the UK - putting the UK - US trade deal in jeopardy (Photo by Chip Somodevilla/Getty Images)

Who does the Digital Service Tax affect?

It's basically aimed at the biggest tech companies in the US; think Nvidia, Apple, Microsoft, Alphabet (Google), and Amazon.

Speaking to reporters from the Oval Office on Thursday, Trump said: “We’ve been looking at it and we can meet that very easily by just putting a big tariff on the UK, so they better be careful.

“If they don’t drop the tax, we’ll probably put a big tariff on the UK.”

This isn't the first time Trump has taken shots at Europe who he sees as 'attacking' American tech companies.

In August 2025, he posted on Truth Social vowing to 'stand up to countries that attack our incredible tech companies,' calling out digital taxes and regulations as being 'designed to harm, or discriminate against, American technology.'

He has repeatedly threatened 'substantial additional tariffs' on any nation that didn't fall in line, with the UK now firmly in his crosshairs.

Several other nations, such as France, Italy and Spain, also have similar digital taxes, meaning the UK is far from alone in feeling Trump's wrath.

But given the nature of the 'special relationship' between the UK and the US over the years, the threats land with extra weight.

Kier Starmer is now under immense pressure from Donald Trump (Photo by Jordan Pettitt - WPA Pool/Getty Images)

The US - UK trade deal under strain

When the US-UK trade deal with announced in May 2025, strangely enough the DST was left completely untouched, despite being a hot button topic throughout the negotiations.

However it now looks like Trump is suggesting those terms can be changed, judging by remarks he made to Sky News in an interview earlier this month.

So basically the deal that was said to be a huge diplomatic win for both sides is starting to look a whole lot shakier.

Downing Street has not yet responded, but the ball is now firmly in their court. The UK faces a tough call: back down and hand Trump a political win, or stand firm and risk a trade was that could hit British exporters hard.

With the trade deal already looking fragile and Trump is a combative mood, neither option looks great.

Watch this space.