A landmark US-UK trade deal will see the UK retain its Digital Services Tax and even opens the door to future technology partnerships and collaboration between the two countries.

Since the election of President Donald Trump a second time, and the implementation of his tariffs, the future of UK and US trade has remained uncertain.

Among his many trade policies, Trump hit out against the UK and other nations for their levies and taxes against American tech companies, mainly Google, Meta, and Amazon, saying that these were unfair to American firms.

However, the trade deal, which has provided more clarity on car and steel tariffs, has also allowed Britain to retain the Digital Services Tax.

The tax is a 2% levy on online services that have worldwide sales of over £500m, £25m of which is sourced from the UK. Major tech companies have therefore been targeted in the levy, which is estimated to contribute over £500m to the UK economy, if not more.

Trump’s earlier policies urged the US government to ‘defend’ its US companies from these taxes, which exist in Britain and other countries.

A loss of the Digital Services Tax could have been disastrous for Labour, especially with its rise of National Insurance contributions and changes to benefits which sparked controversy for many businesses and workers. Losing the funds gained from the tax, and providing an easier playing field to massive foreign companies, may not have been a popular move for the party.

Now, however, the Digital Services Tax will remain in tact, and instead, the UK and US will work on a digital trade deal which could decrease the paperwork necessary for UK firms trying to export to the US.

This would put “rocket boosters” on the economy, the UK government said.

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“This historic deal delivers for British business and British workers,” prime minister Keir Starmer said after the deal with announced in Washington DC. “My government has put Britain at the front of the queue because we want to work constructively with allies for mutual benefit rather than turning our back on the world.

“As VE Day reminds us, the UK has no greater ally than the United States, so I am delighted that eight decades on, under president Trump the special relationship remains a force for economic and national security.

“My government is determined to go further and faster to strengthen the UK’s economy, putting more money in working people’s pockets as part of our Plan for Change.”

Trump also agrees that the deal was a “good for both countries” at a press conference after the deal was settled.

“Both countries have agreed that economic security is national security and will be working together as allies to ensure that we have a strong industrial base, appropriate export controls, and protections for key technologies and industries.”

This is the second major tech trade deal of the week for the UK, which also reached a free trade agreement with India and even changed national insurance contributions for some workers on short-term visas from the country.