U.S. President Donald Trump is targeting digital taxes and other barriers placed on American tech companies, threatening retaliatory tariffs and export controls on nations that refuse to cooperate. While this is largely aimed at the EU and its Digital Markets Act, South Korean authorities are concerned that the country’s regulations might make it vulnerable if the White House follows through with its threats, as reported by Digitimes.
At the moment, Seoul has several laws that restrict and tax access to digital service providers. For example, it applies value-added tax on digital services, meaning foreign companies must remit taxes on digital sales they have made within the country. They also cannot export detailed mapping data, even if they’re an American company, because of national security concerns.
There’s also the larger issue of network fees — a bill in the South Korean legislature wants to introduce the Sending Party Pays (SPP) framework, which will require content platforms to pay South Korean internet service providers for the network traffic they consume. This will affect U.S. tech companies like Netflix and Alphabet/Google (through YouTube) the most, as they will either have to pay the imposed higher fees or host their data outside of the country, resulting in lower quality and higher latency.
All of this stemmed from Trump’s post on his Truth Social platform, saying digital taxes, legislation, and regulations are discriminatory against American companies. “This must end, and end NOW! With this TRUTH, I put all Countries with Digital Taxes, Legislation, Rules, or Regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional Tariffs on that Country’s Exports to the U.S.A., and institute Export restrictions on our Highly Protected Technology and Chips,” the president said.
Korea and the U.S. have recently concluded a summit, but this issue was not discussed between the two parties, said the publication. Nevertheless, industry groups and the U.S. Trade Representative want to see these rules changed. Although South Korea’s laws on digital services aren’t necessarily targeted against American big tech, many of the biggest and most popular of these companies are based in the U.S., so they’re often the most affected ones.
It’s still unclear if Trump’s threats are serious or if they’re just a way to make the Europeans reconsider their stance on the Digital Markets Act. But if ever the White House follows through with import taxes and export controls on account of the EU’s digital barriers, then South Korea might become collateral damage to Washington’s actions.
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