As President Donald Trump works to negotiate a trade deal between the United States and European Union ahead of his July 9 deadline, a new report lays out how the EU’s protectionist policies “disadvantage” U.S. companies in the digital marketplace.
A brief report published by Public Policy Solutions explores how the EU disproportionately affects U.S. technology and telecommunications companies with taxes and regulations, while European companies operate freely in the U.S., and China is let off the hook.
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“While EU companies enjoy open market access in the United States, Europe is doing everything it can to disadvantage U.S. companies in their markets,” according to the seven-page report. “To make matters worse, these misguided policies have left an opening for Chinese 5G and telecommunications influence in Europe, posing national security risks and creating interoperability challenges for allies.”
The report comes as the Trump administration and European officials negotiate a trade deal that would reduce tariffs. If a breakthrough in trade talks is not realized by July 9, Trump is threatening to impose a 50% “reciprocal” tariff on all EU exports.
The EU is subject to a baseline 10% tariff that Trump imposed on most U.S. trading partners in April.
While tariffs are a big part of the conversation, a trade deal should remove non-tariff trade barriers that “hamstring” innovation, according to the report.
These barriers include promoting purchases with European digital companies alone, extracting revenue from significant fees and taxes levied against U.S. digital companies, and imposing regulations and restrictions on data privacy and online content.
For instance, U.S. companies account for 83% of all EU data privacy fines, amounting to more than $5.3 billion since 2018, when data privacy laws and digital services taxes were enacted. Some of the largest EU fines were given to Alphabet, Apple, and Meta.
In 2023, Meta was fined roughly $1.3 billion for violating the General Data Protection Regulation after improperly transferring user data from Europe to the U.S. By contrast, TikTok, which is still owned by Chinese parent company ByteDance, received a lesser fine of $600 million that same year.
The EU should be facilitating a free market instead of discriminating against U.S. digital companies, Public Policy Solutions argues.
Between 2013 and 2023, EU digital services exports to the U.S. rose by $8 billion. Meanwhile, U.S. digital services exports increased by $5 billion in the same period.
The statistic is illustrative of Europe’s “technological sovereignty,” a term that European Commission President Ursula von der Leyen used in a 2019 speech before the European Parliament.
“When our European partners say ‘digital sovereignty’ what they mean is manipulating the digital market to hamstring U.S. companies to give themselves a competitive advantage,” the report reads.
China, meanwhile, is exerting its influence over European 5G and telecommunications infrastructure. Switzerland supplies 90% of its 5G components from China-based Huawei and Oppo, while countries including Austria and Hungary fully rely on Chinese components for their 5G systems.
Joshua Hodges, who previously served as national security adviser to House Speaker Mike Johnson (R-LA), argued that the EU’s protectionist policies not only harm transatlantic commerce but threaten “our collective security” and stifle “innovation in countries worldwide.”
“Globally, we are seeing digital policy architectures emerge that ultimately harm local consumers and entrench Chinese dominance,” Hodges said in a statement shared with the Washington Examiner. “To reverse this trend, allies must work together to reduce regulatory burdens and create an environment where innovation and fair competition can thrive.”
“Rather than erecting barriers—such as increased taxation, burdensome regulation, and discriminatory measures—nations, led by the U.S. and Europe, should be working together to foster open markets and support emerging innovators capable of competing with Chinese firms,” he added.
Public Policy Solutions offers three solutions that a trade deal between the U.S. and EU could incorporate: eliminating all discriminatory taxes, fines, and laws against American digital companies; abandoning unfair regulations; and suspending consideration of the upcoming Digital Network Act, which, if adopted, would transfer wealth from American companies to European companies.
“While we’ve long expected unfair and predatory trade practices from adversaries, we’ve been far too slow to recognize and curtail similar behavior from Europe,” Public Policy Solutions founder and President Joe Grogan said in a statement to the Washington Examiner. “In order to restore balance to our partnership with the EU, any trade deal must address non-tariff barriers like digital service taxes and end their protectionist approach to these American innovators.”
TRUMP ADMINISTRATION AND EU OFFICIALS AIM TO CLINCH TRADE DEAL
Treasury Secretary Scott Bessent previously cited the EU’s digital services tax on American internet providers as a sticking point in the trade talks with the European bloc’s member states.
“It’s going to be a give and take,” Bessent said in April. “They have some internal matters to decide before they can engage in an external negotiation.”