The recent trade deal between the United States and the European Union marks a welcome and significant step forward in transatlantic cooperation. President Trump set the agenda and provided Europe its script. There is little doubt about his sincerely believing that Europe would lose its cultural and economic footings as well as being further enfeebled as a strategic buffer against the Sino-Russian threat without strong U.S. leadership.
Of course, Mr. Trump’s “massive trade deal” marks a watershed moment for American industry. Europe will purchase $750 billion in U.S. energy exports and inject $600 billion of new investment into the United States by 2028, while eliminating all EU tariffs on U.S. industrial goods and imposing a uniform 15 percent tariff on EU products—a dramatic shift toward balanced trade and far more reciprocal terms than ever before.
By removing non-tariff barriers, beefing up rules of origin, and securing expanded market access for our farmers, ranchers, manufacturers and energy producers, the pact promises to shrink our longstanding goods deficit with Europe, bolster American jobs, and reinforce the United States
as the world’s premier investment destination.
Yet, even as we celebrate this collaborative success, an unresolved adversarial drama is playing out in the digital arena, threatening to undermine the very innovation that fuels economies on both sides of the Atlantic. Through its zealous regulation of American tech companies thatprovide digital services to Europe, the European Union means to weaken the market power of these U.S. firms. The World Economic Forum, not surprisingly, sees “digital power concentration” involving companies like Alphabet, Amazon, Meta, Microsoft and Amazon, as an existential risk tocivilization along with global warming, geopolitical tension, mass migration and cybercrime.
To check the success of American tech companies the EU does what it does best - impose smothering regulations. A recent report by Mario Draghi revealed that Europe has more than 100 laws to regulate tech companies and over 270 regulators overseeing digital networks. Much ofthe EU’s regulatory enthusiasm, bottomed on its Digital Markets Act (2022), is aimed specifically at U.S. tech companies.
Using the DMA, the EU requires that U.S. tech firms comply with a long list of acceptable business practices. The law has been applied to 23 online services provided by American companies while conveniently exempting all European companies and all but one Chinese competitor. My researchputs the cost of compliance and revenue losses for U.S. companies suffering discriminatory EU regulation as high as $97.6 billion per year.
As in the past, EU tribunals, ultimately guided by the continent’s devotion to central planning, default to protecting privileged incumbent companies. Using the DMA and other similar authorities, the EU punishes U.S. tech firms that do not comply with its demands to open their platforms to all providers with penalties that can reach twenty percent of a company's total global turnover. The result is a playing field deliberately tilted against the U.S., creating a significant competitive disadvantage.
My research suggests that by 2030, the cumulative revenue lost by U.S. tech companies to this regulatory environment may reach $2.2 trillion, monies that could have supported U.S. innovation. What the EU doesn’t seem to get is that what’s good for us is good for them. The best example is the reluctance of American firms to deploy AI in Europe. Meta has refused to sign the voluntary Code of Practice for General Purpose AI, citing regulatory overreach, warning that the EU will lag in AI adoption.
Returning to the trade deal, its core accomplishments deserve applause. U.S. energy producers will reset Europe’s security vis-a-vis Russia. American manufacturers will enjoy unprecedented market access. And tariff revenues—projected to generate tens of billions annually—will provide a giant step to resolving our deficit. Above all, President Trump
has demonstrated that America can both wield leverage and deliver results, even in the most complex multilateral arenas.
Still, the final agreement relative to the digital economy must resolve unsettled issues, including terms of digital trade, EU tax policies that siphon revenue from U.S. innovators, the regulatory fines that chill investment, and the compliance costs that tilt the playing field. If theadministration seizes this moment, it can turn a generational trade agreement into a truly comprehensive victory for American workers, consumers and global leadership—one that encompasses not only steel and semiconductors but also the data and AI platforms that are driving 21st‑century growth.
