The UK government is in talks to modify its Digital Services Tax (DST) as part of negotiations to prevent further US tariffs, Chancellor Rachel Reeves has indicated. The 2% tax, introduced in 2020, targets major tech firms like Amazon and Meta and generates around £800 million annually. However, it could be adjusted in exchange for relief from US President Donald Trump’s latest round of import taxes.
Speaking on BBC One’s Sunday with Laura Kuenssberg, Reeves acknowledged ongoing discussions, emphasizing the need to balance fair taxation with protecting British exporters. “We do not want to see British exporters subject to higher tariffs,” she said, stressing that companies operating in the UK should still pay taxes locally.
Trump, who has already imposed tariffs on multiple countries since taking office in January, is set to announce additional levies on April 2, a date some have dubbed “Tariff Day.” His administration argues the measures will boost US manufacturing, though businesses warn they could disrupt global supply chains.
The potential DST change has drawn criticism from the Liberal Democrats, with Treasury spokesperson Daisy Cooper accusing Labour of prioritizing tech giants over social welfare. “If the government is seriously talking about putting savage cuts in place while giving a tax handout to Elon Musk and Mark Zuckerberg, they are at real risk of losing their moral compass,” she said. The party is pushing for the DST to be tripled to 6%.
Reeves defended the government’s approach, arguing that the UK does not run a trade surplus with the US and should not be a target of Trump’s policies. She maintained that the priority remains preserving free trade while ensuring tech companies contribute fairly to the UK economy.
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