Will Europe Bend the Rules for Big Tech in Exchange for Trade Benefits?

In a tense exchange over trade relations, US Commerce Secretary Howard Lutnick has urged Europe to reconsider its regulations on big tech companies if it wishes to see a reduction in the tariff rates imposed on its steel and aluminum exports to the United States. During recent discussions in Brussels, officials from the US and the European Union are revisiting the trade framework established in July, which set a 15% tariff rate on European goods—lower than originally threatened—in return for commitments from Europe to invest in the US and allow more American agricultural products into its market.

Despite this progress, contention persists, especially regarding the metals tariffs, which the US has kept high at 50%, with additional products falling under these duties. European officials had anticipated gaining relief on metals tariffs as part of the overall agreement but now seek carve-outs for products like wine, cheese, and pasta—similar to exemptions granted for tropical fruit and coffee by the previous US administration.

US Trade Representative Jamieson Greer reiterated that the US would not consider revising its tariff strategy unless Europe takes action to lower tariffs on American products. Lutnick highlighted the necessity for Europe to shift its digital regulations, asserting that these regulations unfairly disadvantage American tech firms, primarily through digital services taxes that target larger companies.

The Digital Markets Act implemented by Europe has also raised concerns among US firms, mandating compatibility changes for devices like Apple’s iPhones. Despite pressures, Europe has been firm in maintaining that its digital regulations are not discriminatory and won’t be subject to negotiation. European Trade Commissioner Maroš Šefčovič affirmed this position, indicating that the EU perceives its regulations as fair and equally applicable, not aimed specifically at American companies. As discussions unfold, the balance between trade concessions and regulatory compliance could shape future US-European relations.