Exports including jewellery, furniture and game boards could all face tariffs being exported across the Atlantic, with the US targeting British products in response to any digital tax.
The Biden administration has reportedly drawn up plans to target over £236m worth of UK goods in response to any attempt by Britain to levy a technology tax, which Washington believes would be “unreasonable or discriminatory” and place a burden on United States businesses.
The US chief trade negotiator Katherine Tai said it would keep all options open “including, if necessary, the imposition of tariffs” and warned markets including the EU that it could take action if they introduced digital services taxes.
A UK government spokesperson said it wanted to “make sure tech firms pay their fair share of tax”.
They added: “Should the US proceed to implement these measures, we would consider all options to defend UK interests and industry.”
The use of tariffs in response to any technology tax was instigated by the previous Trump administration, which pursued such action against India, Austria and Spain, although baulked at levying tariffs against the entire European bloc.
UK and US trade representatives held talks on a potential digital tax in December 2020 and any potential tariffs are now subject to a consultation in the US over the next few weeks.
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