Trump plans tariffs on non-physical goods, which should worry web infrastructure companies

Retaliatory policies that will hurt the U.S. web ecosystem are becoming more likely.

Last month, I wrote about how tariffs could potentially impact digital goods such as domain names and web hosting.

I noted two complexities to charging tariffs on digital goods.

First, they don’t go through ports like physical goods, making them harder to track.

Second, many countries are bound by the General Agreement on Trade in Services (GATS), a World Trade Organization (WTO) treaty that restricts how governments can discriminate against foreign service providers.

As a caveat to the second point, I noted:

But if Trump’s tariffs are seen as violating other WTO agreements, it could prompt countries to reconsider their own obligations under GATS. That might open the door to more creative forms of retaliation, especially ones that don’t require breaking international rules outright.

On Sunday, President Trump opened a can of worms on intellectual property and digital goods tariffs.

In a post on his social media platform, he stated that he would implement a tariff on films produced overseas.

The Wall Street Journal noted:

It is unclear how such a tariff would work because movies aren’t physical goods that move through ports like most items subject to tariffs. The Trump administration would need to determine how to value a movie to apply the tariffs, as well as what the threshold would be to classify it as an import.

If other countries imposed reciprocal tariffs, it could devastate Hollywood studios, since most big-budget event films earn the majority of their revenue overseas.

As relations with the United States are strained, is it possible that other countries will implement policies to promote local internet companies over U.S. ones?

It certainly seems more likely by the day.