Circleid：In January 2025, President Donald Trump—now back in office for a second term—launched a bold and aggressive trade strategy with sweeping tariffs aimed at reshaping America’s global trade dynamics. Among the most dramatic measures: a 10% blanket tariff on all imports, a 20% tariff on goods from the EU, and a staggering 145% on Chinese imports. Although the elevated rates (excluding China) were temporarily paused in April for 90 days, the 10% baseline remains, signaling a new era of protectionist policy.
But this isn’t just about steel or soybeans—Trump’s economic doctrine is reaching into the digital world, disrupting how the global internet operates and sparking a deeper confrontation over internet governance and fiscal sovereignty.
Digital Services Taxes (DSTs) Ignite a New Front
At the heart of the tension are Digital Services Taxes (DSTs)—measures introduced by countries like France, the UK, India, and Canada to tax revenues (not profits) generated by digital giants within their borders. These taxes, typically 2–3%, apply to services like online advertising, digital marketplaces, and user data monetization.
These unilateral tax regimes emerged out of frustration with stalled global tax reform—particularly the collapse of the OECD’s “Pillar One” negotiations in 2024. In January 2025, the U.S. officially pulled out of the talks, further abandoning multilateralism in favor of unilateral retaliation.
Trump Responds with Tariffs and Tax Threats
Viewing DSTs as direct attacks on American tech companies, Trump imposed retaliatory tariffs under Section 301 of the Trade Act on countries implementing DSTs—among them France, the UK, Spain, and Austria. By February, the administration upped the ante, threatening to invoke Section 891 of the U.S. tax code, which could double corporate tax rates on foreign companies from DST-imposing nations.
The backlash was swift. French Prime Minister François Bayrou condemned the approach as a “hurricane” of instability, while the EU refused to soften its digital regulations in pursuit of a trade deal. Instead, the confrontation escalated into a defining showdown between economic nationalism and digital globalism.
Tech Sector and Markets Recoil
The consequences have been swift and far-reaching. Companies like Apple, which relies heavily on global supply chains and foreign markets, are under mounting pressure. Though some Chinese electronics briefly escaped the 145% tariffs, uncertainty prompted Apple to begin shifting production to India.
Semiconductor manufacturers and cloud providers are also absorbing higher costs for key components like AI chips and server hardware. U.S. stock markets responded with heightened volatility—particularly the Nasdaq and S&P 500—as investors worried about a digital trade war spiraling into a broader recession.
Toward a Fragmented Internet?
Beyond the economics, this digital trade conflict is threatening the open architecture of the global internet. As countries build fiscal and regulatory walls, the once-borderless digital landscape risks breaking into silos defined by national jurisdictions and incompatible standards.
Institutions like ICANN, long defenders of the multistakeholder internet governance model, now face existential threats. Their inclusive, non-sovereign approach is being challenged by state-centric models that prioritize national control over collaborative governance.
The upcoming WSIS+20 summit, initially intended to celebrate two decades of global digital cooperation, is now clouded by geopolitical rifts. Rather than unity, the summit may spotlight the growing divide between those advocating digital multilateralism and those, like the U.S., wielding trade policy as a digital weapon.
Caught in the Crossfire
Smaller nations and global internet users are the collateral damage in this high-stakes power struggle. For them, the issue isn’t just tax fairness—it’s about access, innovation, and the fundamental future of digital connectivity.
What began as a fiscal dispute has become a battle over who controls the rules of the internet economy. Without renewed international cooperation and digital diplomacy, the vision of a shared, interoperable internet could give way to fractured, walled-off digital ecosystems.
The Road Ahead
To avoid this fragmentation, global frameworks like the OECD digital tax initiative must be revived. Institutions such as ICANN, the WTO, and WSIS need to be empowered and modernized to reflect the complex realities of today’s digital economy.
If the world fails to restore cooperation, the internet may mirror the fractured politics of the physical world—at a time when connectivity underpins education, health, trade, and democratic participation. The stakes have never been higher.
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News Source:Circleid，This article does not represent our position.
