Trump Advocates for a Tariff-Free, Tax-Free US Digital Economy
President Donald Trump’s trade agreements, which this week formalized increased taxes on goods from Asia, include clauses pertaining to digital commerce, a global economic frontier that the US wants to remain free from protectionism. The White House secured commitments from Malaysia and Cambodia, along with a preliminary agreement with Thailand, ensuring that none of these countries will implement digital services taxes or engage in discrimination against American providers of e-commerce, social media, streaming, cloud storage, or other online services. Such activities are classified as digital trade when the transactions traverse national borders. While Trump employs tariffs to address US deficits in merchandise trade, his advocacy for a global internet devoid of import duties and other surcharges seeks to maintain the position of the world’s largest economy as the foremost net exporter of e-services. This contrasts with the previous administration led by Joe Biden, which exhibited greater sympathy towards European officials’ concerns regarding unrestricted market access for US tech giants such as Alphabet Inc.’s Google, Meta Platforms Inc., and Amazon.com Inc. “The Trump administration believes that our deficit in trade in goods has been unfairly imposed, but that our surplus in trade in services has been fairly earned” and wants to “maintain our services surplus, while reducing our goods deficit,” said Anupam Chander. “I could understand why other countries would feel that this is itself unfair.”
Last year, global exports of digitally delivered services rose to over $4.77 trillion, marking an increase of nearly 10 percent from 2023 and more than doubling the growth in total goods and services trade, according to figures from the World Trade Organization and the United Nations. The segment of global goods and services trade that experienced the most rapid growth reached approximately $33 trillion last year. Artificial intelligence is supercharging digital trade, prompting concerns among officials regarding national security, data sovereignty, intellectual property abuse, and consumer privacy protections as online services traverse borders without restraint. For certain nations, this signifies a decline in government revenue, as items that were once transported as physical goods – such as a book or a movie – are now delivered digitally, evading conventional customs duties. As Trump attempts to reshape the global trading system, digital commerce has emerged as a new arena for geopolitical fragmentation, with Washington and Beijing competing for influence in Africa, Latin America, and South Asia. The new US provisions for Malaysia, Cambodia, and Thailand are notable as they advocate for the long-term acceptance of an agreement established at the WTO, urging all nations to avoid imposing tariffs on digital services. All three Southeast Asian economies have reached a consensus to endorse a permanent extension of the WTO accord referred to as the “moratorium on customs duties on electronic transmissions.”
In addition to that initiative and another focused on safeguarding fisheries, Washington has turned its back on the WTO – the long-standing arbiter of the rules-based trading system for the past three decades – opting instead for Trump’s unilateral strategy involving so-called reciprocal tariffs. The WTO moratorium has been extended by consensus every two years since 1998, with the most recent approval occurring in 2024, following a last-minute deal that faced delays due to objections from India. The renewal is set to occur once more as the Geneva-based organization approaches its ministerial meeting in March 2026 in Cameroon. “The commitments in the US deals to facilitate the free flow of data are absolutely welcome – especially when set against the trend for localization requirements that we’ve seen in recent years,” stated Andrew Wilson, deputy secretary-general for policy at the International Chamber of Commerce. “While country-by-country progress is valuable, the ultimate goal should be to anchor these norms in a new international deal.” Malaysia’s agreement with Trump featured the further concession that it will not “require US social media platforms and cloud service providers to pay into Malaysia’s domestic fund.” The recent digital agreements established by the US, along with a preliminary accord with Vietnam that includes an ambiguous commitment to finalize digital services obligations, adhere to a framework introduced by the US in July with Indonesia. Notably, Indonesia’s customs agency had proactively incorporated a provision for digital services in its harmonized tariff schedule, or HTS. The agreement stated that “Indonesia has committed to eliminate existing HTS tariff lines on ‘intangible products’ and suspend related requirements on import declarations,” as noted in the White House document.
Under Trump, the US effort for a permanent extension will need to consider the concerns of Brazil and India, both of which have encountered some of the highest US tariffs. Historically, both parties have sought to maintain the ability to generate revenue from foreign technology firms while safeguarding domestic e-commerce businesses. The continuation of the renewable moratorium provided them with leverage in various aspects of trade. “That extension looked very shaky after the last ministerial conference,” remarked Simon Evenett. He stated, while the US utilizes its influence to advocate for a permanent extension of the moratorium, “it’s too soon to say this represents broad-based WTO re-engagement — more likely, it’s selective engagement on a topic critical to US big tech.” Digital services provisions are integral to many contemporary trade agreements, yet the US and European Union hold differing perspectives on the necessity for openness. Brussels officials are advocating for measures to prevent anti-competitive practices and enhance data privacy protections, a stance that US officials view as excessive regulation. Several European nations have irked Washington by implementing taxes on digital services, perceiving these actions as domestic fiscal policy that falls beyond the realm of trade discussions. Earlier this week, French lawmakers voted to double a tax on large technology companies, potentially provoking a backlash from Trump. The US-EU trade framework dated Aug. 21 highlighted that both parties “commit to address unjustified digital trade barriers” and will collaboratively seek a permanent WTO’s e-commerce moratorium. Martina Ferracane, an associate professor of international digital trade at Teesside University in the UK, stated that another temporary extension is more probable than a permanent one, as the US administration has “weakened its credibility” to lead a global consensus on the issue. She referenced Trump’s commitment to impose 100 per cent tariffs on films produced outside the US as an illustration of a “threat of non-compliance” with the global prohibition on tariffs concerning digital commerce.
