Just days after unveiling details of the transatlantic trade arrangement, Donald Trump threatened retaliatory tariffs over the EU’s digital laws. Brussels must now draw a line: its rulebook is not up for negotiation. Regulating the online sphere is a matter of democratic self-determination and if Trump punishes the EU, Europe must be ready to retaliate.
This Policy Position was first published by Table.Briefings on 1 September 2025.
When EU negotiators wrapped up a trade framework with Washington on 21 August, there was modest pride that the EU’s laws regulating digital markets and services had been kept off the table. Many in Brussels saw this as a win: Europe had shielded its digital rulebook from transatlantic horse-trading.
The joy was short-lived. Just four days later, US President Donald Trump railed against digital taxes, services legislation, and market regulations. He claimed these were “designed to harm, or discriminate against, American Technology”, threatening tariffs and export controls against any country imposing them. Without naming the files directly, he clearly alluded to the EU’s flagship Digital Services Act (DSA) and Digital Markets Act (DMA).
That the issue of EU tech regulation would return comes as a surprise to no one. What is striking is the speed at which Trump is threatening to upend the freshly concluded trade agreement over it. This highlights the fundamental problem that the EU faces when engaging with him: with Trump, negotiations are never settled. Agreements are rarely final, and concessions today only fuel new demands tomorrow. Some in Brussels may hope that softening DSA enforcement could buy goodwill – for Ukraine, or the fragile trade ‘deal’. That is wishful thinking. Give in, and a bully will always be back for more.
In the trade arrangement, the Commission made concessions. But they were confined to the trade sphere, revolving around market access and non-binding purchasing or investment intentions. Extending this approach into digital regulation would be entirely different: it would mean restricting the EU’s sovereign right to set its own rules. The DSA and the DMA are the outcome of a democratic legislative process and reflect how Europeans want to regulate their digital space. That this approach does not align with the current US administration is irrelevant – it is Europe’s sovereign prerogative to make that choice.
In an increasingly digital society, the freedom to regulate digital space is a matter of democratic self-determination. To give way here would set a precedent that democratic choices in Brussels can be rewritten under external pressure. That is why it is now the moment to draw a line: the EU must keep trade and digital policy separate and prepare credible responses if the US escalates.
A legal framework for the digital space, not a political weapon
The US government has attacked the DSA and DMA as discriminatory trade barriers and European censorship instruments for months. Yet, these accusations have little basis in reality. Rather, they strengthen a narrative that Trump and his allies deem politically useful and serve the economic interests of US tech companies.
The DSA and the DMA are regulatory frameworks designed to make Europe’s digital space safer and fairer. While the DSA is intended to protect the rights of EU citizens in the digital space, the DMA seeks to ensure that online platforms that act as ‘gatekeepers’ for digital markets do not abuse their market power. Weakening or suspending these laws would mean fewer checks on monopoly power, less transparency in online discourse, and more space for illegal content.
The rules apply to all platforms operating in the EU. To portray them as specifically anti-American, or Trump’s claim that they “give a complete pass to China’s largest tech companies”, is flatly wrong: alongside US’ Meta and X, the Commission is already investigating Chinese platforms like Temu and AliExpress and several European adult-content sites.
Be ready to retaliate
If Trump really moves to punish the EU for enforcing its digital rulebook, the EU must be ready to retaliate to defend its rules and sovereignty. If the US imposes tariffs or export restrictions, Brussels should respond in kind and activate its retaliation mechanisms. Next, it should deploy its Anti-Coercion Instrument – a textbook case for its use – including measures aimed at the US service sector.
Here the EU is not without leverage. In goods, Europe runs a surplus with the US, making it structurally more exposed to tariffs. In services, however, the balance is reversed: the US consistently records a large surplus with Europe. While Europe relies on US firms in areas like cloud infrastructure, many others, from financial to logistical services, are substitutable. That makes restrictions credible as leverage.
Concessions might have been necessary to wrap up a trade deal with the US - sacrificing Europe’s right to regulate its digital space would be something else: a surrender of democratic sovereignty.