The United Kingdom is considering changes to its Digital Services Tax (DST) as part of ongoing talks aimed at averting additional tariffs from the United States, according to Chancellor of the Exchequer Rachel Reeves.

The DST, which was introduced in April 2020, levies a 2% tax on the revenues of major digital firms operating in the UK, including major global entities like Amazon and Meta.

This tax is said to bring in around £800 million each year for the UK treasury.

In an interview on BBC One's 'Sunday with Laura Kuenssberg,' Reeves confirmed that talks are underway concerning possible revisions to the DST.

The Chancellor stressed the importance of ensuring that British exporters are not faced with heightened tariffs, as US President Donald Trump has previously announced various tariffs impacting imports from the UK.

Reeves stated, "We need to strike the right balance, and those discussions are currently ongoing. We want to make progress. We do not want to see British exporters hit with higher tariffs." She highlighted the necessity for companies operating in the UK to meet their tax responsibilities in the UK, while recognizing US apprehensions regarding trade surpluses.

Since taking office, President Trump has enacted and suspended several tariffs on imports, including those from the UK, with some analysts designating April 2 as 'Tariff Day,' when additional tariffs may be introduced.

Trump's administration argues that these tariffs will boost domestic production by encouraging US companies to rely on American suppliers and workforce.

However, many businesses argue that such measures are unfeasible without significant modifications to supply chains.

The Liberal Democrats, a political party in the UK, have condemned the proposed changes to the DST.

Treasury spokesperson Daisy Cooper expressed concern over the discussions regarding potential cuts to the tax, stating, "If the government is genuinely considering implementing drastic cuts that will impact disabled individuals while simultaneously granting tax breaks to Elon Musk, Zuckerberg, and other US tech moguls, then the Labour government risks losing its moral direction." The party is pushing for an increase in the DST, suggesting to raise it to 6%, triple the current rate.

Reeves has asserted that the UK does not display the large, persistent trade surpluses that the US has expressed concern over, claiming that trade between the two nations remains balanced.

As negotiations progress, the outcome could have significant implications for the tech industry and the broader UK economy.