Forget the headline for a second. Look at the numbers. The digital services tax raises £800 million a year. The UK exports roughly £60 billion in goods to the US. Trump is threatening a 100 percent tariff on all of it unless we drop the tax. That is not a negotiation. That is being told to hand over £800 million or lose £60 billion. Nobody is choosing the £800 million. The tax is dead, everyone in Whitehall knows it, and the only question is how they dress up the retreat.
What makes this properly awkward is that the tax was not Labour’s idea. The Conservatives introduced it in 2020. Trump signed a trade deal with the UK in May 2025 knowing the tax was still in place. He did not ask for it to be removed then. Now he is threatening to tear up the deal he signed 13 months ago over a tax he already knew about. The message is not about the 2 percent levy. The message is that any deal with this White House lasts exactly as long as it is convenient.
Any deal with this White House lasts exactly as long as it is convenient.
Burnham inherits this in about three weeks. Trump has already called him “extremely liberal.” Lammy spent years calling Trump a woman-hating, neo-Nazi sympathising sociopath before spending his time as Foreign Secretary trying to build bridges. Relations are already strained over Iran. Now the incoming Prime Minister has to decide whether to cave on the tax immediately and look weak, or resist and risk a tariff war the UK cannot win.
The smart money says the tax gets quietly folded into some broader “digital economy framework” that sounds like reform and works like surrender. That is how these things always end. The interesting bit is not whether Britain backs down. It is what Trump asks for next once he knows it works.