Mindy Herzfeld (Florida), Mocking Up the Digital Services Tax War Games, 192 Tax Notes Fed. 185 (July 13, 2026)

In the warning, which was issued the day after the European Commission agreed to the terms of the EU-U.S. trade deal, he threatened to impose a 100 percent tariff on all goods from countries that implemented a digital services tax against U.S. companies. 

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How realistic are the president’s threats in response to the adoption of DSTs, which generally affect only a few companies and are imposed at low rates on a discrete set of transactions? In Learning Resources Inc. v. Trump, 146 S. Ct. 628 (2026), the Supreme Court demonstrated its willingness to interpret Congress’s presidential grant of authority narrowly and strictly in the context of tariffs.

The European Parliament first voted in favor of imposing an EU-wide DST in 2018. That proposal, which is closely tied to EU integration efforts (revenue would go directly to the EU budget), failed to achieve the necessary unanimous support, but it’s been periodically revived since. In its latest iteration — which may have partly prompted Trump’s threats — the DST is part of the European Commission’s evaluation of proposals for generating its own resources for the EU budget. (Prior coverage: Tax Notes Int’l, June 8, 2026, p. 1739.)

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Even as talks on an EU DST continue and discussions at the OECD remain ongoing, some member countries aren’t waiting around. Poland has moved ahead with plans to introduce a 3 percent DST for companies with global revenues exceeding €1 billion. (Prior coverage: Tax Notes Int’l, May 18, 2026, p. 1166.) And last month, a bill submitted to the Belgian Chamber of Representatives proposed a 3 percent DST on specified digital services. (Prior analysis: Tax Notes Int’l, June 8, 2026, p. 1705.)

Countries’ decisions about adopting DSTs are inextricably linked to the OECD proposal to develop a solution for taxing the digitalized economy. That work, previously amount A of pillar 1, is progressing slowly. The United States stated its commitment to working with other countries to develop an alternative solution, but whether that work will yield anything constructive, and be acceptable to the OECD inclusive framework, is yet to be seen.

For now, countries that have adopted DSTs don’t seem cowed by U.S. presidential bluster and have mostly retained them. And they continue to collect revenue from them even though the process of imposing tariffs in retaliation was terminated pending the work at the OECD.

Trump’s recent threats must be viewed in this context. Whether the warnings — which in this regard have proven empty in the past — will prompt countries to back down remains unclear. Countries with DSTs view them as important tools, not just for raising revenue but as a means of addressing perceived imbalances in trade and services and in marketplace presence.