US President Trump Signs Executive Memorandum to Address Foreign Digital Taxes

US President Trump once again raised the banner of the “America First” economy and signed a new executive memorandum aimed at protecting US technology companies from what he calls “foreign extortion.”

The memorandum made it clear that the current administration will review and counter foreign tax and regulatory measures that disproportionately affect US companies, among which Canada’s digital services tax remains a core point of contention.

The memorandum instructs the Office of the United States Trade Representative (USTR) to study trade remedies against Canada’s digital services tax under the United States-Mexico-Canada Agreement (USMCA) (see IBFD news on September 5, 2024, “The United States Initiates Dispute Settlement Consultations on Canada’s Digital Services Tax”).

Previously, a White House briefing stated that foreign digital services taxes have caused US companies to lose billions of dollars in unfair taxation and compliance costs (see IBFD news on February 14, 2025, “US and Canada Trade Friction Intensifies Due to Digital Services Tax”).

In addition, the memorandum requires Treasury officials to investigate whether foreign tax policies violate tax treaties signed by the United States or whether countermeasures should be taken under Section 891 of the Internal Revenue Code, which allows the United States to double taxes on citizens and businesses in countries that “implement discriminatory taxes.” The final findings will be included in the report required by the last presidential memorandum issued on January 20, 2025.

The memorandum also disclosed other laws that the current US government plans to review, including regulations requiring US streaming platforms to fund local content production, policies to impose network fees on US content providers, and data localization rules that force US companies to store sensitive information abroad.

The memorandum also established a formal reporting mechanism that allows US companies to notify USTR of foreign tax and regulatory measures that “disproportionately harm US companies.” The move makes the US government a direct enforcer of corporate complaints in the field of global trade.

In addition to Canada’s digital service tax, the memorandum also targets digital service taxes in France, Austria, Italy, Spain, Turkey and the United Kingdom. USTR’s investigations into these countries were initially launched by the Trump administration on July 16, 2019 and June 5, 2020, but subsequently stalled.

The White House officially issued the above-mentioned executive memorandum on February 21, 2025.