Hit digital goods and services like domain names? — Could tariffs

Countries could strike back against web infrastructure countries, even if it’s not in the form of tariffs.

Donald Trump has disclosed sweeping tariffs that primarily target physical goods imported into the United States. In response, affected countries are retaliating with tariffs on U.S. exports, hitting back at products like bourbon and Harley-Davidson motorcycles to pressure Trump into changing course.

While the U.S. runs a trade deficit in physical goods, it consistently maintains a trade surplus in services. These services include financial transactions, consulting, software, cloud computing, and other digital or intangible exports. In other words, the U.S. is a net exporter of services, and that could make services a tempting target in the next phase of trade retaliation.

Why aren’t countries targeting services?

Legally, they can’t. At least not easily.

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.

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.

Licensing restrictions in China

Take China and domain names as an example. In the domain name industry, China requires domain registries to obtain a license from its Ministry of Industry and Information Technology (MIIT) to sell domains in the country. Some registries have waited years for approval.

This licensing process gives the Chinese government significant leverage. If tensions escalate, MIIT could revoke licenses, slow down approvals, and impose fresh requirements on registries or registrars.

Regulation and taxation in Europe

Meanwhile, the European Union by now takes a tough stance on U.S. tech firms. It has:

• Fined firms like Meta and Google for antitrust and privacy violations
• Passed strict data laws like the GDPR
• Introduced the Digital Markets Act (DMA) to limit the power of sizable platforms

If the trade war deepens, the EU could increase regulatory pressure or raise fines, applying more economic pressure on U.S. firms.

Some EU countries also impose Digital Services Taxes (DSTs) on firms like Google, Amazon, and Meta. These taxes are modest today (typically 2–3% of revenue), but they could be increased as a form of retaliation.

What It Means for the Domain and Hosting Industry

While domains and hosting represent a relatively modest share of overall U.S. service exports, they’re vulnerable to the trade war.

More impactful targets could be cloud computing and software platforms where U.S. firms dominate. Still, domain name registries and web hosting providers ought to also be watching this issue closely, as they might be swept up into broader trade war measures.