UK Prime Minister Starmer, today (8 May), announced aluminum, steel, and automotive US tariffs cuts saying that they will come into force “as soon as possible” without any mention of expected tax breaks for Big Tech in return.

Starmer was joined by US President Trump in announcing the long awaited tariff agreement on VE day, the 80th anniversary of the end of the second world war. Both men hoped to channel Churchillian significance in their delivery of the announcement, however, details on the deal were short.

The UK becomes the first country with agreed US tariff cuts in a largely symbolic win as the headline 10% tariffs remains across many sectors.

Speculation in advance of the announcement included the UK granting tax breaks for US Big Tech currently required to pay a 2% Digital Services Tax (DST) on revenues generated by UK users.

Starmer noted that there was “a lot in the deal about tech”, referring to red lines on standards in agriculture but nothing about the DST. Reuters reported that the British government confirmed that the DST will not be changed under the terms of the trade deal agreed.

Starmer also noted that the US and UK were the only two countries to have trillion dollar technology sectors. Indeed, UK Ambassador to the US, Peter Mandelson, standing next to Trump in the oval office during the announcement, described the deal as not complete, but rather “the end of the beginning”.

Mandelson alluded to furthering the transatlantic partnership on technology as a critical component of the deal. But there was no further mention on whether the DST might figure in the agreement.

The UK’s DST, implemented in 2020, was an attempt to address the tax loophole for US headquartered online businesses operating in markets in which they have no physical presence.

The European Commission implemented its own digital tax in 2022 called the Digital Markets Act (DMA). The DMA introduced a raft of restrictions on technology companies deemed ‘gatekeeper platforms’, a term defined by a threshold of 45 million monthly EU users, annual revenues of €6.5bn, or 10,000 annual business users. Penalties stand at up to 10% of a company’s annual worldwide revenue.

The legislation came into force on 1 November 2022 in a staggered implementation which saw companies required to inform the European Commission of their “gatekeeper criteria” by May 2023. Gatekeepers then had until March 2024 to comply with the DMA. On 23 April, the European Commission announced that it was fining Apple and Meta under DMA, posing an existential overseas threat to Big Tech despite the modest fines levied.

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