As Lord Mandelson settles into his ambassador’s residence in Washington, potential flashpoints in the US-UK relationship are becoming evident. Trade was always poised to be an issue given President Trump’s mercantilist instincts. Increasingly, however, the British government’s treatment of American digital technology giants looks to be a source of tension.

When JD Vance addressed the Munich security conference and blasted “digital censorship”, it was a warning shot to European regulators who have spent years curbing free speech under the guise of fighting misinformation and policing “online harms”. The Trump administration looks set to fight global regulations that impinge upon Americans’ freedom of expression.

Shortly thereafter, Trump signed an executive order stipulating that nations imposing digital services taxes (DST) on US tech firms would face “reciprocal tariffs”. While the UK’s existing DST wasn’t mentioned explicitly — unlike Canada’s and France’s — the implication was clear: foreign governments cannot extract revenue from American tech companies without repercussions.

Those two principles — free speech and tax sovereignty — both run up against Britain’s coming Online Safety Act. Although the most extreme “legal but harmful” censorship rules were watered down for adults, the law still bites on speech. Major tech platforms must block kids from accessing a range of harmful content, while restricting access for “at risk” children to even more content, including depictions of violence against fictional characters. Compliance with such ambiguous rules will inevitably restrict content for adults.

That, combined with new ministerial powers to order firms to “use accredited technology” to prevent child sexual abuse imagery — potentially eroding encryption services — might have got Team Trump’s attention on speech grounds alone. Yet the plan is for this £70 million new content moderation regime to be funded through a global revenue tax on Meta Platforms, Google, Microsoft, Apple and TikTok. Republicans see that for what it is: an extraterritorial tax grab.

Maybe under President Biden, who supported stringent content moderation, the UK would have got a pass. Now, though, the new Maga-tech bro administration is riled up. Google has warned that digital services will flee the UK; Elon Musk’s company, X, agrees. The Home Office’s recent demand that Apple create an encryption back door to allow government access to worldwide cloud content only fuels fears about UK heavy-handedness on American tech companies.

As a free speech absolutist who opposes both targeted taxation and government privacy intrusions, I’d like the UK to change course. Yet there’s a bigger question about governance here. The UK’s Competition and Markets Authority has already blocked major global mergers, such as Meta’s takeover of Giphy, and the CMA’s new digital markets unit (DMU) will soon have sweeping powers to police tech firms, threatening them with huge fines and shaping product offerings worldwide. The issue is that the UK is making legislation with global effects, including on Americans.

Biden’s government didn’t mind this extraterritorial regulation because it supported its ideological premises. Yet regulating according to intellectual fads leaves you exposed to changing tides. Vance’s remarks unequivocally convey that the Trump administration perceives European-style digital regulation as an affront to both American business interests and the First Amendment. The Online Safety Act endows UK regulators with extensive authority to shape and monitor online speech, while the DMU imposes regulatory constraints with international ramifications. Trump’s team give every indication they won’t stand for them.

UK officials may hope that Trump himself will get distracted by other issues. Yet tech entrepreneurs like Musk now sit at the heart of his administration and if Trump himself is preoccupied, the Republicans in Congress are keeping tabs. The Starmer charm offensive has bought goodwill with Trump that’s helped Britain avoid being singled out. So far. Recent events, though, suggest that only serious policy shifts will prevent a tech clash. Mandelson has his work cut out.