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Keir Starmer
has had new discussions with
Donald Trump
Amid growing speculation that Britain might eliminate a tax on U.S. technology companies to prevent tariffs on British exports, discussions around a U.S.-UK trade deal are heating up.
Downing Street
Yesterday, it was disclosed that the Prime Minister had a telephone conversation with the US President on Sunday evening to ‘talk about the advancements’ regarding a potential agreement.
Ministers are rushing to obtain an exemption from the stringent American tariffs set to take effect on April 2nd.
Sources from Whitehall have verified that eliminating the £800 million Digital Services Tax, primarily targeting US technology companies, has been discussed as part of these talks.
At the weekend, Chancellor
Rachel Reeves
declined to dismiss the possibility of eliminating the 2 percent charge on the UK earnings from social media, search engine, and online retail platforms such as
Google
, Amazon and
Meta
.
However, yesterday she signalled her intention to oppose the change, emphasizing that the tax is ‘extremely significant’.
The Chancellor stated: “We will keep ensuring that companies pay their equitable portion of taxes, this includes those within the digital industry.”
The levy was implemented in 2020 aimed at ensuring technology companies contribute more towards taxes and address concerns that these businesses benefit unfairly from lower taxation rates when contrasted with traditional brick-and-mortar stores. However, the collected funds have significantly undershot the projected annual amount of £3 billion.
President Trump
suggested a potential ‘new trade agreement’ during Sir Keir’s visit to the White House earlier this month.
The ministers have minimized expectations regarding a comprehensive free trade deal. However, they think that even a restricted accord focusing on technology and AI might enhance economic conditions and prevent the impending duties – potentially as high as 20 percent or higher – scheduled for implementation the following week.
When asked if the Digital Services Tax would be eliminated as part of an agreement, the Prime Minister’s spokesperson said to journalists on Wednesday, “The UK will agree to a deal solely when it benefits the nation’s interests and aligns with this government’s commitment to ensuring financial stability for Britons.”
The National Institute of Economic and Social Research has projected that such tariff levels might
reduce economic growth by 0.4 percent over the coming two years,
Costing the UK economy approximately £24 billion.
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