Britain is considering softening its digital services tax and revisiting online safety laws as part of efforts to secure a trade deal with the United States and avoid sweeping tariffs imposed by former President Donald Trump, Prime Minister Sir Keir Starmer has confirmed.
In a session before the Commons Liaison Committee, Starmer said both the digital tax and the Online Safety Act had become points of discussion in ongoing negotiations with Washington. He stressed the importance of protecting children online while signaling a willingness to reassess existing rules to reach an economic agreement with the US.
“In relation to trade talks, obviously there are questions about the appropriate way to tax digital services, etc. There are questions about how technology impacts free speech,” he told MPs.
Tech Tax Targeted
At the heart of the talks is Britain’s digital services tax, which is levied on major tech companies including Meta, Amazon, and X—platforms owned or led by prominent billionaires such as Mark Zuckerberg, Jeff Bezos, and Elon Musk. The US administration has long opposed the measure, viewing it as discriminatory against American firms.
Starmer acknowledged the sensitivity of the issue, noting, “I’ve been very clear in my view that we need to have arrangements for a digital tax of some sort,” but added, “Equally we need to be pioneers of free speech which we have been for very many years in this country.”
While neither the tax nor the safety law is expected to be scrapped entirely, the Government is exploring adjustments to reduce their impact on tech firms.
Online Safety Act Under Pressure
The UK’s Online Safety Act has also drawn criticism from the US, with Vice President JD Vance accusing Britain of curbing free speech. The Act imposes a legal duty on social media firms to enforce their own terms of service, a measure that Vance and other US officials argue is excessive.
Despite this, Starmer insisted on maintaining protections for children, saying, “When it comes to paedophiles and protecting children, I take a pretty strong line that we take the necessary measures in order to do so.”
A Labour MP familiar with No 10’s thinking warned that some in the party may be caught off guard by the Government’s direction. “I think the PLP is going to be shocked,” they said, adding that the Online Safety Act’s current form, described as a “statement of principles,” could be easily altered without appearing to abandon it entirely.
Trade Barriers Under Review
Chancellor Rachel Reeves confirmed that the negotiations with the US involve removing or weakening a range of barriers to trade, including those affecting the tech sector. “We are discussing a range of different areas, but the focus is on reducing tariff and non-tariff barriers to trade,” she told Parliament.
Trump’s latest round of tariffs has singled out UK steel and automotive sectors, raising fears for their future. In response, Industry Minister Sarah Jones told the Government’s steel council that the UK would “stand up for UK steelmaking,” with the nationalization of British Steel’s Scunthorpe site among the options under consideration.
Talks Continue as Deadline Looms
Trade talks between the two nations began during Starmer’s visit to the White House in February this year, but a final deal was not secured before Trump’s “liberation day” last week when sweeping tariffs were announced.
Starmer indicated that retaliatory measures remain a possibility but emphasized diplomacy over escalation. “Obviously we have to keep our options on the table and do the preparatory work for retaliation if necessary. But I think that trying to negotiate an arrangement which mitigates the tariffs is better,” he told MPs.
As the negotiations continue, the UK’s willingness to adjust key tech laws may determine whether it can shield critical industries from the brunt of the US tariffs.
