Trump threatens 100% tariff on digital tax countries: Will India face the impact?

US President Donald Trump on Friday warned that countries imposing digital services taxes on American companies would face a 100% tariff on goods exported to the United States, while also threatening to cancel existing trade agreements with those nations.

In a post on his Truth Social platform, Trump said any country imposing such a tax would “immediately” face tariffs on all goods shipped to the US, adding that the move would override trade deals “whether implemented, signed, or not.”

The Trump administration has long opposed digital services taxes, arguing that they unfairly target major American technology companies such as Alphabet and Meta.

India unlikely to be affected

India is unlikely to face the impact of the proposed tariff threat as it has already withdrawn its Equalisation Levy, popularly known as the “Google Tax”, which applied mainly to foreign digital companies.

Introduced in 2016, the levy imposed a 6% tax on online advertising payments made by Indian businesses to non-resident digital firms, including US-based technology companies.

The tax on digital advertising services was removed through the Finance Bill, 2025, with effect from April 1, 2025. Officials had indicated that the decision was partly aimed at easing trade tensions with the US.

India had also removed the 2% Equalisation Levy on foreign e-commerce operators through the Finance Act, 2024.

EU likely to face pressure

Trump’s latest warning is expected to have a greater impact on European countries, especially members of the European Union.

The announcement came shortly after EU nations approved a trade agreement negotiated with Washington that capped tariffs on European imports at 15%. However, the deal did not resolve disputes over digital services taxes, leaving the issue open.

Trump has argued that such taxes create barriers for US companies because many of the world’s largest technology firms are American.

Earlier this month, he threatened 100% tariffs on French wine and champagne unless France removed its digital services tax on technology companies.

France introduced a 3% tax in 2019 on revenue earned by large technology firms within the country, affecting companies including Facebook, Amazon, Apple and Google parent Alphabet.

The European Commission responded to Trump’s latest warning by saying the EU would “respond swiftly and decisively” to protect its rights and regulatory independence.

The US Trade Representative has for years warned countries including France, Britain, Austria and Spain that they could face retaliatory tariffs over digital services taxes.