President Donald Trump has escalated the transatlantic trade dispute by threatening to impose a 100% tariff on goods from any country that maintains a digital services tax on American companies.
The warning, issued via a post on Truth Social on Friday, explicitly names Europe as a target for potential trade action if nations do not repeal the levies on US tech firms.
The threat marks a significant hardening of the US administration's stance on digital taxation, moving beyond previous diplomatic friction to the prospect of severe economic retaliation.
For investors, the announcement introduces new uncertainty for multinational technology companies with substantial revenue exposure in Europe, where several governments have implemented or are considering such taxes to capture value from digital giants.
Markets are likely to scrutinize the exposure of major US tech stocks to European jurisdictions, particularly those with active digital tax regimes.
The potential for a tit-for-tat trade war could weigh on sentiment across the technology sector and broader equity markets, as traders assess the risk of supply chain disruptions and retaliatory measures from European partners.