Stocks Extend Losses As White House Threatens Retaliation Against ‘Unreasonable’ EU Digital Tax

US equity markets are extending early losses following the Trump administration threatening retaliation against the European Union in response to efforts to tax American tech companies.

The White House singled out prominent companies, including Accenture Plc, Siemens AG and Spotify Technology SA, as possible targets for new restrictions or fees.

“If the EU and EU Member States insist on continuing to restrict, limit, and deter the competitiveness of U.S. service providers through discriminatory means, the United States will have no choice but to begin using every tool at its disposal to counter these unreasonable measures,” the Office of the US Trade Representative said in a social media post on Tuesday.

“Should responsive measures be necessary, U.S. law permits the assessment of fees or restrictions on foreign services, among other actions,” the post said.

As Bloomberg reports, the USTR named several other European companies, including DHL Group, SAP SE, Amadeus IT Group SA, Capgemini SE, Publicis Groupe and Mistral AI, which it said have enjoyed unfettered access to the US market for years.

At issue are regulations governing digital commerce, as the EU moves to regulate and tax US tech giants, including Alphabet Inc.’s Google, Meta Platforms Inc. and Amazon.com Inc. Critics of the EU’s digital tax plans say they are slowing down technological innovation, with global implications, and unfairly seeking to raise revenue.

The threat could heighten tensions between the US and the EU amid faltering peace talks aimed at resolving the war in Ukraine.

It also follows stiff criticism from President Trump, who last week in a Politico interview called the bloc a “decaying” group of nations with “weak” leaders.

Trump has imposed significant tariffs on imports – including 15% on many goods from the EU – to counter levies and other barriers he says unfairly limit the sale of US products.

The so-called digital services taxes levied by European nations on US companies have long been an irritant for US policymakers.

The bloc has persisted “in a continuing course of discriminatory and harassing lawsuits, taxes, fines, and directives against U.S. service providers” that “provide substantial free services to EU citizens and reliable enterprise services to EU companies,” while supporting millions of jobs and more than $100 billion in direct investment in Europe, USTR said.

“The United States has raised concerns with the EU for years on these matters without meaningful engagement or basic acknowledgement of U.S. concerns.”

Congress considered targeting the measures with a provision in Trump’s signature tax cut legislation that would have imposed a “revenge tax” on countries the US deemed “discriminatory.”

The USTR on Tuesday said the risk extends to “other countries that pursue an EU-style strategy in this area” - a potential warning for Australia, the United Kingdom and other nations contemplating similar policies.