White House threatens 100% EU tariffs over digital tax as US refunds $81bn
Washington is paying back $81bn in illegal tariffs while preparing a new wave of 100% duties specifically targeting European digital services taxes.
The US government has refunded $81bn in tariffs to companies after the supreme court ruled a major portion of Donald Trump’s import taxes illegal, according to budget figures released on Monday.
The data shows payouts surged from just $5bn during the same period last year. A Treasury department official attributed the spike almost entirely to the court ruling, with the vast majority of refunds processed in May and June.
The sudden reversal is upending Washington’s fiscal maths. Trump had sold the tariffs as a way to shrink the federal deficit, which had initially improved last year on the back of the import revenue. Instead, the deficit has risen 2% to hit $1.367tn in the first nine months of the fiscal year.
The budget hole is widening just as debt interest payments surpass $1tn, a 14% increase, and military spending climbs 5% amid the war in the Middle East.
For European exporters and policymakers, the financial fallout in Washington is prompting a tactical shift at the White House. With a temporary 10% global tariff set to expire on 24 July, the administration is looking for new legal avenues to maintain its protectionist agenda.
The White House is drafting duties of 10% to 12.5% targeting what it calls lax enforcement of anti-forced labour laws and excess industrial capacity. The measures would hit leading US partners including the UK, Japan, India, Taiwan and China, with Brazil facing a potential 25% levy.
Digital tax threat to Europe
The most immediate risk to Europe, however, stems from Washington’s aggressive stance on digital services taxes. Several EU member states, including France, Spain and Italy, impose a 3% tax on large American tech firms. The UK applies a 2% version of the levy, which raised more than £800m in 2024-25.
Trump has issued a direct threat to block these policies. “Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100 per cent TARIFF on any and all Goods sent to the United States of America,” he wrote on Truth Social.
He added that these penalties “will supersede Trade Deals made with the Country, whether implemented, signed, or not.” The warning effectively puts European governments on notice that sovereign tax policies targeting US tech giants will trigger an immediate and total closure of the American market to their goods.
