On his first day in office, President Trump signaled a firm stance against foreign taxes that discriminate against U.S. companies. This move comes amid ongoing challenges with trading partners who seek to tax the revenue of American digital services firms, a practice seen as violating trade agreements. The OECD Global Tax Deal negotiations aimed at replacing such unilateral digital services taxes with global tax reform have stalled, raising concerns about potential retaliatory actions from the U.S., including tariffs.

President Trump recently signed executive orders indicating minimal tolerance for digital services taxes (DSTs) where foreign governments disproportionately tax U.S. company revenues. In light of these developments, the Computer & Communications Industry Association (CCIA) released a study today detailing the economic impact of a hypothetical 3% DST on U.S. businesses.

The study estimates that such a tax could cost U.S. businesses $23 billion annually, reducing export revenues and income for shareholders while threatening up to 31,000 full-time equivalent jobs in the United States. Additionally, it could decrease federal tax revenues by up to $5 billion per year—an amount sufficient to cover nearly 50,000 federal civilian employee salaries.

Trevor Wagener, CCIA’s Chief Economist and Director of the Research Center, stated: “Vigorous action by the new administration to defend U.S. trade interests by deterring further adoption of digital services taxes and persuading trade partners to rescind existing digital services taxes can save U.S. companies $23 billion per year, protect 31,000 U.S. jobs, and protect up to $5 billion in federal tax revenue per year. That’s enough tax revenue to pay for the annual salaries of nearly 50,000 federal civilian employees–more than are employed by six major federal departments.”