Until now, Europeans have backed away from confronting Washington, fearful of losing American security support and aid to Ukraine. They signed a lopsided trade deal, accepting 15% tariffs on their exports to the US while eliminating all tariffs for American goods.
But the threat of new US tariffs and a takeover of Greenland have prompted a rethink. The news of a “framework” to resolve the Greenland dispute and the pause of potential new tariffs has failed to quell European anger. Calls are mounting to end the conciliatory approach and instead fight back. China could be the winner.
Despite Washington’s change of heart on using military force and tariffs to seize Greenland, some acts of retaliation are already visible. The European Parliament paused ratification of the transatlantic trade deal. The European Commission outlined €93 billion in retaliatory counter-tariffs. And Germany joined France and the European Parliament in endorsing the possible use of a new Anti-Coercion Instrument.
This so-called “bazooka” was designed to thwart China’s influence. Instead, Europeans are thinking first of using it against the US. It includes a wide range of possible measures, such as imposing tariffs, restricting exports of strategic goods, or excluding American companies from tenders.
Silicon Valley looks like a vulnerable target. European governments could impose new digital taxes. They could pull the plug on US social media companies, restrict intellectual property rights, and prevent US tech companies from bidding on public contracts or even from investing in Europe. Specific targets could include app stores, cloud services, and charges for using European data.
Digital taxes are back on the agenda. France already imposes them on US tech. Brussels proposed extending them to the entire European Union earlier this year, only to back down after Washington complained. Germany now has begun considering its own levy.
Two new proposals underline the hardening of European attitudes: a revised Cybersecurity Act and a telecom regulation, the Digital Networks Act. The cyber proposal is designed to force European telcos to remove “high-risk” Chinese vendors, principally Huawei, from their 5G networks. Telcos have resisted, unwilling to pay the high cost of ripping up their networks.
What’s new is the inclusion of cloud services and satellite technology as two areas of potential cybersecurity risks. Microsoft, Google, and Amazon dominate cloud computing. Starlink controls satellite communication. Many Europeans now deem these dependencies as dangerous as their reliance on Chinese telecom equipment.
The proposed telecom rules open the door to imposing “network fees.” Since Netflix, Google, and others send a disproportionate amount of data over their networks, European telcos argue that they should pay extra — even if the idea runs counter to the principles and practice that spread the Internet around the globe.
Tensions over existing European tech regulations were rising and now look set to soar. Washington already views the Digital Markets Act and the Digital Services Act as non-tariff barriers. Europe disagrees and has moved ahead with probes on the lack of content moderation and dominance of app stores and messaging services of so-called US gatekeepers, ranging from Meta to Google to Apple.
Some novel ideas to target US tech are being advanced. Finnish European Parliament member Aura Salla, an ex-Meta executive, has proposed that data be treated as raw material and tariffed as such, increasing the cost of doing business
As European attitudes towards Washington harden, there are signs of softening on China. Brussels is moving to water down the stiff tariffs it imposed last year on Chinese electric vehicles. It allowed carmakers to submit price undertakings, including “the minimum import price, sales channels, cross-compensation, and future investments in the EU.”
Admittedly, the European Union often finds it difficult to achieve unanimity among its 27 members. Divisions already have emerged about unleashing the bazooka against US tech. Ireland, home to many European headquarters of US tech giants, has expressed reservations. Other capitals remain worried about undermining Ukraine.
Europe remains dependent on US tech. A total transatlantic break would hurt Europe, and it remains unlikely. Who can imagine depriving Europeans of access to Netflix or Facebook? Equally, it is unimaginable to make a complete break from Google search or Amazon cloud.
Yet the vehement tone emerging from Europe’s capitals should not go unnoticed in Washington or in Silicon Valley. Europe has the weapons to wound both. The unanswered question is whether it has the will.
Ronan Murphy is Director of the Tech Policy Program at the Center for European Policy Analysis.
William Echikson is a non-resident Senior Fellow at the Center for European Policy Analysis and editor of the Bandwidth Blog.
Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.
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