The Irish Times view on Trump’s new tariff threat: this time it’s digital

US president Donald Trump is at it again, throwing around threats of new tariffs, this time directed at Europe. In his latest salvo, he has taken aim at the digital services taxes in place in some European countries and planned in others. These are charges put in place so these countries can levy some tax on the sales activities of the big tech multinationals in their markets. Trump has threatened to impose tariffs of 100 per cent on the imports into the US of products from these countries in retaliation.

Previous experience shows that many of his threats are never followed up and others lead to action on a much more restricted scale. A US president heading to mid-term elections is unlikely to risk the further rise in inflation which such charges on goods coming into the US would create.

Still, the move shows that, despite the trade deal agreed last year between the EU and US, ongoing tensions persist and tariff threats have far from disappeared. The UK, France and Italy are among the countries to have digital services taxes. The European Parliament has recommended an EU-wide version, though this is unlikely as all 27 member states would have to sign up. An OECD plan for an internationally agreed digital services levy has fallen away. Ireland, as the European headquarters for many digital service companies, benefits significantly from their corporate tax payments.

The risk to the Irish economy would be if Trump did target some EU countries with tariffs and the EU responded, starting off a tit-for-tat trade war. On a wider scale, the renewed tensions underline that transatlantic economic relations will remain unsettled for as long as Trump is in the White House. As a country reliant on US investment and trade, Ireland is exposed to any upheaval here. If the EU/US trade deal falls apart, this would be bad news for Ireland.