Tech is America’s greatest export. In a global trade war, it’s vulnerable too.

Subscribe to enjoy similar stories. Tech companies and their services-focused revenue don’t appear to be in the crosshairs of the new tariffs imposed between the U.S., Mexico and Canada on Tuesday. But they’re far from immune from a growing trade war.

Technology services are key U.S. exports—making them particularly vulnerable to foreign levies. The initial focus on goods-based tariffs has overlooked service offerings from companies like Microsoft, Alphabet, Meta Platforms, and Netflix.

But trade retaliation can take many forms; tariffs are just one tool. There are many ways for countries to tax U.S. services.

In recent years, dozens of countries have already levied “digital services taxes" on U.S. software, marketplaces, advertising, social media, and streaming services. U.S.

businesses have had to raise prices to offset the tax, see profitability thinned, or have service contracts go to non-U.S. providers. Canada, for instance, already has a 3% digital services tax that applies to marketplaces, advertising, social media, and user data sales.

Though it isn’t only levied on U.S. companies, in practice it mostly impacts large U.S. tech and media firms.

In a growing trade war, Canada could choose to raise that tax significantly for U.S. companies. And it’s a large target: In the 12 months ended in the third quarter of 2024, U.S.

companies exported $1.1 trillion in services, according to the Bureau of Economic Analysis, 23% of all exports. That’s all fair game in a broad trade war. In its last fiscal year, Microsoft earned 49% of its revenue from outside the U.S.