Why Europe’s Digital Rules Should Not be Part of the Trade War

Mark Scott is a contributing editor at Tech Policy Press.

The high-stakes game of chicken that is the global trade war appears to be mostly over — at least for the next 90 days.

After United States President Donald Trump announced on April 9 that he was stepping away from wholesale tariffs on other countries — except for those targeting China — many policymakers worldwide breathed a sigh of relief.

That was particularly true within the European Union where officials had earmarked a retaliatory 25 percent tariff on scores of American goods, worth a collective $23 billion, that included everything from soybeans and orange juice to motorbikes and yachts.

On April 10, the European Commission said it would similarly pause those tariffs for 90 days.

In the escalating transatlantic trade war, American policymakers had complained about how the 27-country bloc’s $173 billion annual trade surplus in goods with the US, based on the latest annual figures. In response, European officials looked enviously at the US’s $120 trade surplus in services with the EU — primarily driven by American dominance in global financial services and, importantly, technology.

In the weeks building up to the current tit-for-tat (paused) tariffs, speculation rose that Brussels — bristling from deteriorating relations with its closest ally — would seek to target digital services from the likes of Meta, Alphabet and Amazon in its collective brinkmanship with Washington.

That could have included the use of the EU’s new digital rules like the Digital Services Act (DSA), Digital Markets Act (DMA) and upcoming Artificial Intelligence Act (AI Act) to go after Silicon Valley just as Trump’s administration had targeted European automakers.

Europe’s new legislation includes hefty fines of up to 10 percent on companies’ yearly revenue that either abuse their market dominance or do not protect EU citizens from illegal content or goods online. The likes of X, Meta and Apple are all, separately, facing ongoing investigations under either the DSA and DMA. The companies deny wrongdoing.

The AI Act, which won’t come into full force until late 2026, similarly allows EU enforcers to fine tech firms up to 7 percent of their annual global turnover if they use the emerging technology for so-called “prohibited practices.” That would include creating China-style “social scores” on EU citizens or mass harvesting people’s images for facial recognition purposes.

Yet this view — that Europe should weaponize its digital regulatory playbook in response to US tariffs — fundamentally misunderstands how such regulation works. It also fails to grasp what the EU is trying to achieve with its comprehensive renewal of how the online world is protected from harm and abuse.

For many outside of the bloc, the likes of the DMA, DSA, and AI Act are perceived as part of a longstanding protection racket where EU officials target primarily American tech giants with multi-billion dollar fines and demands on how they operate — almost exclusively to favor smaller European rivals.

In that context, it only makes sense for the European Commission, which is in charge of both these new digital rules and the bloc’s trade policy, to dip into its bag of protectionist tricks to retaliate against the White House’s now-paused 25 percent across-the-board tariffs. (While those levies have been postponed, most countries will still face a flat 10 percent tariff over the next 90 days.)

Such thinking is flawed — and misunderstands the rationale behind Europe’s new digital rules.

When it comes to enforcement, it is true the DSA and DMA have over-indexed on American tech firms. Yet that is almost exclusively because the likes of Alphabet, Microsoft and Meta remain the largest technology companies in the world, and therefore are more likely to skew online markets or house substantial amounts of illegal material and goods compared to smaller EU competitors.

It’s also worth noting that Chinese tech firms like ByteDance and Alibaba have also been targeted with investigations under Europe’s digital playbook.

In truth, the collective DSA, DMA, and AI Act are inherently more focused on internal EU issues than they are on the bloc’s external relations with the world.

Under the online safety rules, for example, European regulators are interested in how social media is removing terrorist content that targets EU citizens and how these platforms are promoting authoritative information ahead of national elections.

Under the digital competition legislation, separate EU officials are focused on providing breathing space for European and non-European tech companies to grow beyond the online dominance of a few Silicon Valley giants. That includes recent demands on Apple to open up its popular operating software to outsiders, including rivals from the US.

Under the proposed AI legislation, policymakers are interested in safeguarding EU citizens’ fundamental rights against a fast-evolving technology that is growing faster than anyone had ever imagined. They have also pulled back on a new generation of AI legislation to give startups greater leeway in how they develop AI.

None of these policy levers, inherently, are designed to be used as a blunt weapon in a global dispute between Europe and its closest trading partner. That is why, when European Commission President Ursula von der Leyen announced the EU’s now-paused retaliatory tariffs against the US earlier this week, she exclusively focused on offline goods — and not online services.

No one knows whether Washington and Brussels will reach a deal over the next 90 days to forgo a transatlantic trade war that would cripple both side’s economies. But in the inevitable negotiations between EU and US officials that will follow in the coming weeks, Europe’s digital regulatory rulebook should not be part of the horse-trading.

Those rules were designed, above all, to safeguard EU citizens from harm and open up the bloc’s internal economy to greater competition. That should not be haggled away in an attempt to forestall an EU-US trade war.