Donald Trump regularly attacks the US's largest trading partner - the European Union, which he says is "designed to screw us". Just a few days ago, Trump imposed new tariffs of 20% on all imports from the EU, and the main reason is the large trade deficit in goods.
However, the US president conveniently avoids another aspect of the trade relationship between Brussels and Washington - services. The EU has a 109 billion euro deficit with the US in the field of services, mainly digital services. This makes the overall trade deficit far more balanced than the administration in Washington presents it. Large American tech companies - such as Amazon, Apple, Google, Intel, Meta and Microsoft - dominate Europe. And if the trade war between the US and the EU deepens, Brussels could hit Washington there, and that would hurt, as a number of media outlets and observers have noted.
"All instruments are on the table"
In response to Trump's new tariffs, European Commission President Ursula von der Leyen emphasized that one of the cards Europe can play is in the field of technology. Governments in Europe can try to limit their dependence on American technology giants, even if Europe does not currently have good alternatives to their services.
The European Commission proposed the creation of an instrument to combat coercion (ACI) in 2021 and officially presented it in 2023. It serves to "deter and respond to economic coercion" on the international stage, but it has not been used so far. Among the measures envisaged by the ACI are "imposition of tariffs, restrictions on trade in services, restrictions on trade-related aspects of intellectual property rights and restrictions on access to foreign direct investment or the award of public contracts." Von der Leyen stressed that "all instruments are on the table".
Brussels is expected to impose a record fine on Musk's X
On the other hand, although they were not created as tools for waging economic warfare, the Digital Services Act and the Digital Markets Act could seriously affect the big tech giants. And very soon. The first major victim of the Digital Services Act, which aims to regulate social networks and limit harmful content on them, is expected to be Elon Musk's X. The European Commission has been investigating the company of the billionaire close to Trump since 2023, and according to sources from the "New York Times" from Brussels, it could be fined more than $1 billion - 6% of its annual turnover - for spreading disinformation and illegal content on the platform. Meta is also being investigated for violating the same legislation.
With regard to the Digital Markets Act, which is supposed to protect competition, Apple and Meta could be fined very soon, writes "Politico".
However, the European Commission and European MPs emphasize that compliance with Community law cannot be perceived as part of a trade war. German MEP Andreas Schwab even criticized the Commission for not taking a decision on sanctioning the technology giants quickly enough to demonstrate that "there is nothing political about them". However, the Trump administration and the billionaire owners of these companies close to it are not expected to interpret the decisions in the same way. In February, Washington threatened retaliatory tariffs specifically over tech regulations, citing perceived risks to American companies and freedom of expression. Since Trump is "open to negotiations, I fear he will try to use digital services as a negotiating tool. But I hope the European Commission will be firm", Danish MEP Kristel Schaldemose told "Politico".
It all depends on Washington's behavior
The issue of imposing a tax on digital services has been discussed in the EU for years, but the 27 are not unanimous. The president of the European People's Party, Manfred Weber, commented that "digital giants pay very little for our digital infrastructure and profit a lot from it".
And some countries are already acting independently. The coalition agreement of the Belgian government, for example, includes the introduction of a digital tax by 2027, if no similar agreement is reached at international or EU level. Ireland, home to the European headquarters of several major American technology companies, has already announced that it does not support such measures, which could only harm the European economy.
Whether Brussels will respond to calls for more aggressive measures against the US, which could include higher taxes on American technology companies, delays in issuing licenses and excluding them from public procurement, is still unclear and will mostly depend on the White House's behavior in the upcoming negotiations. "While the EU is unlikely to take significant retaliatory measures now, it will likely threaten to do so if the negotiations do not lead to a result by mid-year," economist Holger Schmieding commented, quoted by CNBC.
Experts agree that such measures will also be felt by European consumers. But if Washington does not back down, European politicians will be forced to use all the cards they hold in their hand, as Ursula von der Leyen said.
Alexander Detev (editor)