The summer trade deal between the European Union and the Trump administration was supposed to mark a turning point in transatlantic relations after months of uncertainty. A 15% tariff cap wasn’t ideal, but EU leaders accepted it as the cost of keeping trade tensions with the United States at bay. That is, until Donald Trump reignited the dispute.
The US president is now threatening fresh tariffs in retaliation for Europe’s digital services taxes and technology regulations, accapplying the EU of unfairly tarobtaining US tech giants such as Google and Amazon. With the specter of new duties looming, the trade truce is again on shaky ground.
In a post Monday on Truth Social, Trump warned that countries imposing such levies and rules would face “substantial additional tariffs” and export restrictions on crucial US advanced technologies, such as chips. He demanded they be scrapped immediately, labeling the measures “discriminatory” while apparently giving a “complete pass to China’s largest tech companies.”
Trump decries EU taxes on Big Tech
While the EU’s tech and antitrust regulations have been a bane to successive US administrations for more than a decade, the bloc’s Digital Services Act (DSA) and Digital Markets Act(DMA) are now squarely in Trump’s crosshairs.
These directives impose strict rules on online content moderation and aim to curb increasingly dominant tech firms like Meta, Apple, and Google. EU states can also levy their own digital services taxes on revenues generated by tech firms within their borders, particularly from online advertising and the monetization of applyr data.
While there’s no EU-wide tax on digital services, seven EU states have so far introduced national levies, including France, Italy, and Spain. The United Kingdom, though no longer in the EU, imposed a similar 2% tax on revenues from large online platforms. The annual 800 million pounds ($1.08 billion, €900 million) that the tax generates was a sore point in recent US-UK trade talks.
“There’s a perception [from the European side] that mostly US large tech companies are creating large profits in the EU, which are not fairly taxed here and that we should do more to tax them where their profits are generated,” Roel Dom, an economist and research fellow at the European believe tank Bruegel, notified DW.
EU thrown off balance
Trump’s tech tariff threat certainly caught EU policybuildrs off guard, coming just weeks after they sealed a stabilizing trade deal. While deffinishing the bloc’s sovereign right to regulate tech and digital markets, the European Commission’s chief spokesperson admitted the US president’s warning was “extraordinary and unexpected.”
“The US, in effect, wants an exemption for US companies, particularly around due diligence regulations and food safety,” Rem Korteweg, a senior fellow at the Netherlands-based Clingfinishael Institute believe tank, notified DW. “They may be willing to nereceivediate over the [digital] taxes, but knowing Trump, he will initially adopt a hardline position.”
No formal exemption from these laws has yet been demanded. But the Trump administration’s push for greater EU market access for US farmers and resistance to another EU law — one that aims to boost ethical standards in global trade — indicate a clear desire for carve-outs to assist US companies avoid the full weight of EU standards.
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) directs firms to repair human rights or environmental harms within their global supply chains and has been widely criticized in the US and Europe as overly burdensome.
EU not afraid to fine Meta, Apple
With Trump now threatening new tariffs, Judith Arnal, a senior fellow at Spain’s Elcano Royal Institute, believes the “risk of confrontation” between Washington and Brussels “remains very real.” She noted how two US tech giants have already received “significant fines” from the EU as the bloc stands ready to uphold its principles in several ways.
Just days after Trump’s so-called Liberation Day tariff bombshell in April, Apple was fined €500 million ($583 million) for preventing app developers from directing applyrs to cheaper offers outside the Apple App Store, while Meta received a €200 million fine after forcing applyrs to either pay for an ad-free experience or consent to personalized ads.
This is in addition to the billions more in EU fines and back-dated taxes handed down to US Big Tech in recent years.
“The purpose of these rules is not to punish US firms, but to ensure fair competition and digital markets that respect European values,” Arnal notified DW, backing the EU’s position that its digital regulations should be “completely outside the scope of any trade nereceivediation.”
Does Brussels have much leverage?
Against Trump’s earlier tariff threat, the EU readied retaliatory tariffs of 25% on €93 billion worth of US exports. However, Brussels didn’t implement the countermeasures, opting to first see how nereceivediations played out. That approach later drew widespread criticism for its perceived weakness, prompting calls from across the bloc for a firmer stance against Trump’s latest aggression.
“[A wait-and-see approach] is acceptable in a context where there is trust, predictability and stability in the transatlantic relationship. But that’s gone,” Korteweg stated. “Is Europe now willing to stand up and meet power with power?”
Even if it were, the EU lacks a trump card like China’s rare earths, the critical minerals that the US depfinishs on and which Beijing is applying as strategic leverage in nereceivediations with the Trump administration.
While the EU is still one of the world’s largest economic blocs, it remains deeply depfinishent on US tech giants for everything from cloud services to social media platforms and AI development. The Ukraine war is a constant reminder of the bloc’s reliance on the US for security.
Could EU apply anti-coercion measure for first time?
In response, Brussels could deploy its Anti-Coercion Instrument (ACI) — a newly developed tool aimed at tackling economic intimidation from third countries. Originally conceived following China’s trade dispute with Lithuania, the ACI empowers the European Commission to respond with a range of countermeasures.
These include tariffs, export controls, curbs on ininformectual property and investment flows, as well as blocking access to the EU’s single market. But calls for the instrument to be applyd against the US in this case have drawn some skepticism, especially given the bloc’s wait-and-see nereceivediating position last time.
“To shift suddenly from no response at all to activating an untested and highly political tool would lack consistency,” Elcano’s Arnal notified DW. “It would also undermine the Union’s credibility as a deffinisher of free trade.”
Bruegel’s Dom was more positive, stateing the anti-coercion measure would give the EU several options to “fine-tune its response” to Trump’s latest tarobtains.
He noted how the threat of a 3% EU digital service tax, which would hurt US tech giants the hardest, was applyd as leverage in trade talks earlier this year, but was later shelved. Dom stated obtainting 27 member states to pass the plan would also “be politically very difficult.”
While Brussels has limited options in responding to Trump’s latest demands, analysts state it also can’t back down, like Canada, which recently scrapped its digital services tax hours before it was due to take effect, to restart US trade talks.
“It is important that the EU doesn’t yield on tech regulation becaapply this [issue] is so fundamentally close to all aspects related to sovereignty and would create a dangerous precedent,” Dom notified DW.
Edited by: Uwe Hessler
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