The trade relationship between the European Union (EU) and the United States has entered another uncertain phase, as US President Donald Trump has threatened new tariffs against Europe. This comes only weeks after both sides agreed on a summer trade deal that was supposed to calm months of tension. That deal included a 15 percent tariff cap, which EU leaders accepted as a compromise to prevent further escalation.
But the truce now appears shaky. In a post on his Truth Social platform, Trump accused the EU of unfairly targeting American technology companies such as Google, Amazon, Meta and Apple with new rules and digital services taxes. He warned that countries introducing such measures would face “substantial additional tariffs” and restrictions on critical US exports like advanced computer chips. Trump described the EU’s policies as “discriminatory” and claimed the bloc was giving China’s largest tech firms a free pass.
The EU’s Digital Services Act (DSA) and Digital Markets Act (DMA) are at the center of this dispute. These laws seek to regulate how tech companies handle online content and prevent monopolistic behavior by big players. They also empower EU states to impose national digital services taxes on revenues generated by tech firms, especially from online advertising and user data. Seven countries — including France, Italy and Spain — have already introduced such levies. Outside the EU, the United Kingdom also has a similar 2 percent tax, which generates about £800 million yearly but has caused friction in US-UK trade negotiations.
Economists say the European position is driven by the belief that US-based tech firms make huge profits in Europe but contribute little tax in the region. Roel Dom, a research fellow at the European think tank Bruegel, said Europe wants companies to be taxed where their profits are generated. Trump’s new tariff threats, however, caught EU policymakers by surprise. The European Commission’s chief spokesperson called the US president’s comments “extraordinary and unexpected.”
Experts believe Trump may be aiming for exemptions for US companies not only in the tech sector but also in agriculture and food exports. The US has already expressed concern over another EU policy — the Corporate Sustainability Due Diligence Directive (CSDDD) — which requires companies to address human rights and environmental issues in their global supply chains. Many in the US business community view this law as costly and burdensome.
Judith Arnal, a senior fellow at Spain’s Elcano Royal Institute, warned that the “risk of confrontation” between Washington and Brussels is very real. She pointed out that the EU has not hesitated to fine US tech firms in the past. For example, Apple was recently fined €500 million for limiting app developers, while Meta was hit with a €200 million penalty for its controversial ad practices. These are in addition to several other billion-euro fines imposed over the years. According to Arnal, the EU insists its regulations are not meant to punish US firms but to create fairer competition and protect European values.
The big question now is how Europe will respond. During Trump’s earlier tariff threats, the EU prepared retaliatory tariffs of 25 percent on €93 billion worth of American exports but later held back, hoping negotiations would ease tensions. That decision was widely criticized within the bloc as weak. Analysts like Rem Korteweg of the Clingendael Institute say Europe cannot afford a “wait-and-see” attitude anymore, especially since trust and stability in the transatlantic relationship have broken down.
One possible tool for Europe is the Anti-Coercion Instrument (ACI), a new policy created to fight economic intimidation. Originally designed in response to China’s trade dispute with Lithuania, the ACI allows the EU to impose tariffs, control exports, restrict investments, or even block access to its single market. Some analysts argue it could be used against the US, but others warn that deploying it against Washington would be inconsistent with Europe’s past restraint and could harm its reputation as a defender of free trade.
Bruegel’s Dom said the ACI at least provides Europe with options to fine-tune its reaction. He added that a proposed EU-wide 3 percent digital tax could also serve as leverage, but passing it across all 27 member states would be politically difficult.
For now, Brussels remains cautious, but observers stress that the EU cannot back down entirely. They point to Canada, which scrapped its digital services tax hours before it was set to take effect in order to reopen trade talks with Washington. Many warn that if Europe retreats on digital regulation, it would set a dangerous precedent and weaken its sovereignty.
With both sides holding firm, the future of EU-US trade relations is again uncertain. Trump’s hardline position, combined with Europe’s determination to regulate Big Tech, suggests that the conflict over digital taxes and technology rules may shape the next stage of transatlantic economic ties.
