BRUSSELS — The American tech sector has become a significant focus as Europe prepares to address tariffs imposed by Washington. However, consensus in Brussels on how to respond remains elusive.
As President Donald Trump unveiled a series of tariffs late Wednesday, European officials and lawmakers identified Big Tech firms and digital services as potential vulnerabilities for the United States.
While the European Union enjoys a €157 billion trade surplus in goods, it faces a €109 billion deficit in services, particularly in the digital sector. Major players like Apple, Microsoft, Amazon, Google, and Meta dominate various market segments within Europe.
During a European Parliament session on Tuesday, European Commission President Ursula von der Leyen highlighted technology as one of the “cards” the EU can play regarding the impending tariffs.
Nonetheless, the EU grapples with internal disagreements on how to proceed.
Key regulations, such as the Digital Markets Act (DMA) and the Digital Services Act (DSA), are not intended as tools for retaliation. Past attempts to impose higher taxes on tech giants have failed. Governments might consider revising public procurement policies to reduce spending on Big Tech, but many countries lack viable alternatives. Moreover, some nations, including Ireland, caution that targeting U.S. tech could harm their economies.
Direct actions against Big Tech are likely to provoke strong backlash from tech leaders like Elon Musk, Jeff Bezos, and Mark Zuckerberg, who maintain close ties with Trump.
Europe could utilize its most potent trade tool, the Anti-Coercion Instrument, to specifically target U.S. tech firms. However, this tool remains untested, having been designed as a “trade bazooka” during the first Trump administration but never implemented.
Laws versus Trade Wars
The EU has yet to finalize significant investigations under the DMA, focusing on digital competition, and the DSA, concerning content moderation.
The Commission is expected to impose fines on Apple and Meta for breaching digital competition regulations, marking the first fines issued under the DMA, anticipated later this week or early next week.
Brussels has also identified Elon Musk’s X in preliminary violations of the EU’s content moderation rules, which could lead to fines amounting to 6 percent of the company’s global annual revenue. Meta is also facing scrutiny under the same regulations.
EU officials emphasize that enforcement of these regulations should not be misconstrued as part of a trade war.
“The DMA is not a bargaining chip,” stated French Renew lawmaker Stéphanie Yon-Courtin. “This regulation is designed to establish fair rules in Europe, not to be leveraged in trade negotiations with the United States.”
Andreas Schwab, the lead lawmaker on the DMA from the center-right European People’s Party (EPP), asserted that the Commission should expedite its forthcoming decisions on Apple and Meta to demonstrate that they are non-political.
The central argument is that the EU’s tech laws aim to uphold European values rather than discriminate against specific countries. Any contrary perception could jeopardize the Commission’s position when Big Tech companies inevitably contest the initial fines and penalties.
In contrast, Washington has suggested otherwise. The Trump administration signaled in February its intent to impose retaliatory tariffs against the EU’s tech regulations, citing concerns for U.S. companies and freedom of expression.
The recent tariff announcements from the White House have rekindled calls for Brussels to initiate investigations under the existing regulations.
With Trump “open for negotiations,” there are fears he may attempt to use digital services as leverage. Danish socialist MEP Christel Schaldemose expressed hope that the European Commission would remain steadfast.
Greens lawmaker Alexandra Geese concurred: “Let’s enforce the DSA and DMA robustly.”
Taxes and Levies
Proponents of a strong response to Trump’s tariffs have proposed various forms of retaliation, including imposing higher taxes on digital services and preventing U.S. tech firms from competing for government contracts.
Brando Benifei, a social democrat lawmaker leading the Parliament’s delegation to the U.S., underscored the necessity for “broad countermeasures that target where it hurts,” suggesting retaliation against intellectual property rights or excluding U.S. companies from public procurement.
Digital services are likely to come under scrutiny, according to Finnish EPP lawmaker Aura Salla, formerly a top lobbyist for Meta in Brussels.
EPP President Manfred Weber noted on Tuesday that “digital giants contribute minimally to our digital infrastructure while reaping substantial benefits.”
Several EU member nations have echoed these sentiments. French government spokesperson Sophie Primas indicated that the EU’s next retaliation wave could target “digital services that currently lack taxation.”
The discussion around a digital services tax has been ongoing in the EU, but the bloc’s 27 member states lack consensus on the matter, as taxation policy requires unanimous agreement.
Consequently, some countries have opted to act independently. Belgium’s recent coalition agreement includes plans to implement a digital tax by 2027 if no international or EU-level agreement is reached.
Ireland, home to several major U.S. tech companies, has swiftly responded, with Trade Minister Simon Harris asserting that targeting U.S. digital services does not reflect the EU’s stance and could significantly harm Ireland’s economy.
