US President Donald Trump has announced that he will crack down on the country's Digital Services Tax (DST) on tech companies in the country. He has ordered his trade representatives to initiate an inquiry into countries like France, UK and Canada that impose DST and propose retaliatory tariffs.

As Nepal is also imposing 2 percent DST on technology companies of annual turnover, it is seen that it may be affected by this step of Trump. 

Various countries, including Nepal, have been imposing DST on major American technology companies like Microsoft, Google, Amazon, and Meta. American technology companies like Microsoft, Google, Meta, Adobe, Netflix, Amazon, Apple paid 41.5 million DST in the last fiscal year 2080/81. According to the Economic Act 2080, non-resident individuals (companies) with an annual turnover of more than 20 lakh rupees must pay 2 percent of the annual turnover value of the electronic service tax and 13 percent of the VAT in Nepal. 

In the current financial year 2081/82, after amending the Economic Act, instead of 20 lakh rupees, it has been mentioned that the tax will be levied only on transactions of more than 30 lakh rupees per annum. From July to November of the current year, 493 million 41 thousand rupees have been transacted and 64 million rupees 95 thousand rupees have been filed in the tax office. Last year, among the DST payers in Nepal, an American company alone had a maximum turnover of Rs 1.31 billion.

According to Bloomberg, a White House official said in a regular press briefing that President Trump is not in favor of allowing foreign governments to use America's biggest taxpayers for their own benefit. The Trump administration's analysis is that various countries have unfairly targeted American companies through taxes such as DST and undermined various aspects of international trade.

Considering this as a reference, President Trump has directed an investigation into DST issues under Section 301 of the Trade Act of 1974. This law gives the US the right to retaliate against any trade practices it deems unfair. 

France has been collecting hundreds of millions of dollars from major American technology companies for such taxes. Such a tax is 2 percent of turnover in the UK and 3 percent in Canada. Along with these countries, countries like Italy, India, Turkey, Austria, Spain have also imposed a digital tax of 2, 3 or 5 percent. Reuters reports that France has collected more than 500 million euros in digital taxes from the 5 largest American technology companies in 2024 alone. 

Digital services tax has been a subject of constant controversy for the past few years. Countries that implement these taxes argue that big tech companies should pay taxes on the income they earn by doing business in their markets. But the US administration has been saying it is partisan and a risk to mutual economic interests. "The way other countries are behaving in the digital space is unfortunate," Trump said on Friday.

If the Trump administration imposes additional tariffs on countries that implement DST, it will have a huge economic impact. Tariffs on imports could disrupt supply chains and result in higher costs for American businesses and consumers. According to the Information Technology Industry Council of America, such tariffs will have a long-term impact on U.S. gross domestic product and employment, as increased business costs are passed on to consumers.

In the past few years, the new US government, which has been in a continuous trade war with China, Russia and other countries regarding advanced chip technology, has indicated that it will not stop its aggressive policy but will not make concessions to its trade partners and traditional friends.

Experts estimate that if this decision of the Trump administration is implemented, its impact will be seen worldwide. Christine Lagarde, President of the European Central Bank, commented that if the regulations are relaxed, it can boost innovation and economic growth in the technology sector, but on the other hand, geopolitical tensions and economic instability caused by trade sanctions and tax wars can upset the economic balance. "This is a double-edged sword," she said, "We welcome innovation in the technology sector, but we must also take into account the risk of economic instability."

Not only has the move been made in response to DST, the Trump administration has also been aggressive in other areas of technology regulation. Recently, the Federal Trade Commission (FTC) initiated public hearings on issues related to Censorship on technology platforms. Through this, the American government is trying to regulate the subject of freedom of expression and prejudice in social networks. 

Along with this, the Trump administration has dismissed the Biden government's policies regarding artificial intelligence (AI) as hindering the development of AI. On the other hand, Trump has also been making public announcements to establish America's dominance in AI anyway.

His Vice President JD Vance, who was Trump's representative at the global AI conference in Paris, refused to sign the joint statement issued there. He expressed that he would leave the US as a leader in AI, rejecting efforts to impose unnecessary regulation on AI.

Since the previous term, Trump has made a mark of announcing tariffs by prioritizing the economy and putting American interests above, and has continued to do so in this term. Whether it is 10 to 20 percent tariffs on various goods to reduce the trade deficit and protect American companies, or 10 percent additional duties on Chinese goods, Trump has drawn the sword of tariffs in Canada, Mexico, and even European countries. 

He has been preparing or announcing one reaction tariff after another like DTS. Although such tariffs will provide positive benefits to some jobs and American industries, American analysts estimate that electrical, vehicle and household goods will become more expensive and if such tariffs are maintained, the common consumer will suffer losses.

Despite initial estimates, Trump's economy is not doing as well as expected, according to an analysis published in Bloomberg. Analysts believe that the new policy of the Trump administration has had a significant impact on both the US domestic and global markets and has increased economic uncertainty. 

The Trump administration, filled with tech billionaires like Elon Musk and Silicon Valley riches, seems to have made a policy to deal with technology obstacles like DTS through tariffs. Businessmen like Musk, Peter Thiel have welcomed this step of the Trump government.

Other company heads seem to have a slightly critical opinion on this. Since it is a matter directly related to Nepal, what will be the conclusion of the Trump administration's investigation and how it will affect it will be revealed more in the coming days.