A threat that predates the tariff, and one that doesn't
On June 26, 2026, President Trump posted on Truth Social that "any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States," adding that the tariff "will supersede Trade Deals made with the Country, whether implemented, signed, or not." The trigger was what he called the "imminent implementation of a Digital Services Tax on American Companies" by European governments. Italy did not need to implement anything — it has taxed digital services since 2019.
Italy's Imposta sui Servizi Digitali, created by Law 145/2018 and administered by the Agenzia delle Entrate, charges a flat 3% on revenue from targeted advertising, digital intermediation platforms, and the transmission of user data collected on digital interfaces. It applies to any firm — resident or not — with at least €750 million in global revenue. The 2025 Budget Law (Law 207/2024) went further, stripping out the old €5.5 million Italy-specific revenue floor, so the tax now reaches any qualifying firm doing business in Italy at all, not just the largest platforms. Current annual collections run around €400 million; the Treasury projected the threshold change would add roughly €51.6 million more, pushing total DST revenue toward €450–500 million a year.
Italy already tried to defuse this fight
What's notable is that Italy's own 2025 change was a deliberate concession to Washington, not new aggression. Economy Minister Giancarlo Giorgetti told Reuters that broadening the tax to smaller firms — rather than keeping it narrowly aimed at giants like Google, Meta, and Amazon — was designed specifically to "eliminate the discrimination element" the US had complained about. It didn't work. Italy remains one of the six countries — alongside France, Austria, Spain, Turkey, and the UK — named in Trump's February 21, 2025 presidential memorandum, "Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties," which directed the US Trade Representative to renew Section 301 investigations into each country's DST and recommended tariffs as a remedy. Sixteen months later, that investigation-and-remedy process has apparently been overtaken by a single social media post threatening blanket, immediate retaliation — with no visible link to a completed Section 301 finding against Italy specifically.
That gap matters legally. Section 301 tariffs require an investigation and a determination that a practice is unreasonable or discriminatory before remedies attach to a specific country. An across-the-board "impose a DST, get a 100% tariff" rule looks more like the broad reciprocal-tariff approach the Supreme Court curtailed earlier in 2026. Trump's post did not specify what statutory authority would deliver an immediate tariff, and legal commentary since the announcement has noted the same uncertainty. For Italy, this means the threat currently functions as leverage and signaling more than as an enforceable policy — which doesn't make it costless, but does make its target and timeline hard to pin down.
The case for a digital tax, stated fairly
The strongest argument for DSTs isn't really about US-EU rivalry — it's about where profit gets booked versus where it's earned. A platform can sell advertising against Italian users' attention and data without any taxable local presence under old permanent-establishment rules built for factories and warehouses, not ad auctions. Italy's 3% levy is a stopgap for that mismatch while multilateral reform stalls. The OECD's Pillar One framework, meant to replace unilateral DSTs with an agreed reallocation of taxing rights, has been negotiated since 2021 and still has no US ratification path, partly because Congress never moved implementing legislation. Absent that, individual governments reasonably ask why platforms earning hundreds of millions from their citizens' attention pay corporate tax mostly to Ireland or Delaware.
Why the tariff response still overshoots
Even granting that case, a 100% tariff threat is a wildly disproportionate instrument. Italy's DST raises under €500 million; a 100% tariff on Italian exports to the US — worth tens of billions annually — would devastate unrelated sectors like automotive parts, machinery, and fashion to punish a tax policy those exporters had no role in writing. It also lands on ordinary consumers of Meta and Google's ad products: Meta itself, starting July 1, 2026, began charging advertisers a location fee matching each country's DST rate — 3% in Italy, France, and Spain, 5% in Austria and Turkey, 2% in the UK — meaning $100 of ad spend delivered into Italy now costs $103 regardless of where the advertiser sits. The DST's actual economic incidence is already falling substantially on small businesses buying ads, not on Big Tech's margins. Layering a punitive tariff on top compounds a policy Rome adopted to fix a genuine tax-base gap, not to "extort" American firms, in the memorandum's language.
Where this leaves Rome
Meloni's government now faces a threat with no clear legal trigger, aimed at a tax it already tried to make defensible on the US's own terms. The sensible path remains what it was in February 2025: push Pillar One forward as the actual off-ramp, rather than let a single Truth Social post substitute for trade policy. Until Washington specifies which statute delivers an immediate 100% tariff, Italy has more room to hold its position than the headline threat suggests — but that room shrinks fast if this becomes the template for enforcement rather than a one-off warning.