SIR Keir Starmer yesterday refused to rule out a mega tax break for US tech giants including Amazon and Google.
The PM opened a door to reforming the digital services levy as part of a future trade deal with Donald Trump.
It came after US trade representatives revealed that Britain had refused to give ground on waiving the £700million tax for Silicon Valley firms.
The President’s top trade advisor, Peter Navarro, slammed the tax as a “bad virus” that has spread across the world.
Asked about the possibility of watering it down while on HMS St Albans during a visit to Norway, Sir Keir reckoned: “The deal that we signed off yesterday doesn’t cover that.
“On digital services, there are ongoing discussions, obviously, on other aspects of the deal, but the important thing to focus on is the sectors that are now protected that the day before yesterday were very exposed.”
White House officials said: “The United States is disappointed that the UK was unwilling to agree to fully address its discriminatory digital services tax.
“It is discriminatory, unjustified and should be removed promptly.”
Since 2020, the UK has slapped a two per cent tax on revenues from tech giants including Jeff Bezos’s Amazon.
The levy currently rakes in around £700million per year for Treasury coffers.
Mr Navarro described the tax as a “very big deal to President Trump” and added that negotiations to axe it are continuing.
“Meanwhile, ministers yesterday continued to heap praise on the current US-UK trade deal, agreed on Thursday.
Chief Secretary to the Treasury Darren Jones hailed it as “really good for Britain” and insisted it was urgently needed to protect 150,000 livelihoods.
He told the BBC: “The option on the table is to have not signed a trade deal with the United States and had higher tariffs, or to have signed a trade deal with the United States and had lower tariffs. We’ve signed that trade deal.
“We’ve got lower tariffs in critical manufacturing sectors in the UK and 150,000 people’s livelihoods have been protected as a consequence of that trade deal.”