By Joe Grogan
Friday, June 27, 2025
The European Union has spent years exploiting its trade
relationship with the United States while ignoring the obligations that should
come with it. President Trump has rightly made clear that this era of U.S.
indulgence is over.
So far, the EU seems unwilling to give up its present arrangement. Despite
months of negotiations, European leaders have refused to offer meaningful
concessions, especially on their campaign of digital protectionism aimed at
American firms. In response, Trump recommended a straight 50 percent tariff on
the European Union. After the European Commission asked for more time, the
Trump administration agreed on May 25 to delay enforcement until July 9. But if
Europe won’t change course, the U.S. is prepared to take necessary measures to
rebalance the relationship.
This standoff exposes an uncomfortable truth: We’ve long
expected unfair and predatory trade practices from adversaries like China, but
we’ve been slower to recognize similar behavior from Europe. That has to
change.
For too long, Europe has leaned heavily on American
defense spending and economic output while offering little in return. Whether
through underfunded NATO contributions or lopsided trade arrangements, the U.S.
has effectively underwritten European stability.
And now, European governments are implementing policies
that disadvantage American tech companies in favor of their own through
tariffs, taxes, and regulations. These policies further strain what should be a
mutual partnership.
One example is the new wave of state-backed initiatives.
Europe simply cannot keep up with America’s technological innovation, so it
uses projects like Gaia-X and EuroStack to displace American cloud
infrastructure with European alternatives. Nothing about these initiatives is
driven by innovation or competitiveness. These companies are propped up by
massive public subsidies and enjoy regulatory
protections that tilt the playing field in their favor. European nations are
trying to legislate these companies into relevance at the expense of U.S. firms.
Tax policy has become another tool of discrimination.
Take the Digital Services Tax (DST), a levy
common throughout Europe. Unlike standard corporate taxes, the DST is applied
to revenue, not profit. This forces even unprofitable firms to pay. Thresholds
for taxation are set high enough to exempt most European companies while
capturing nearly every major U.S. tech company. France alone collected more
than $640 million in DST revenue in 2022.
France unapologetically branded its GAFA tax after the very companies —
Google, Amazon, Facebook, and Apple — it was crafted to hit.
Then there are the Digital Services Act (DSA) and Digital
Markets Act (DMA). These were sold by the European
Commission as neutral frameworks for reining in Big Tech. In reality, they’re
strategic tools for handicapping U.S. firms while protecting underperforming
European ones. The DMA, for example, forces the largest digital tech
platforms, and only those select platforms, to comply with a list of “dos and don’ts” that impose
mandates for interoperability with other products and customer access to data
while prohibiting mechanisms that would create preferential treatment of their
products or dissuade customers from leaving. The law conveniently targets
companies that are overwhelmingly American — six
of the seven named firms, to be exact.
Meanwhile, the DSA hands European regulators sweeping
authority to police online speech. It forces American platforms such as
Facebook and Google to comply with vague, arbitrary rules about what’s
“harmful” or “illegal.” In practice, that means censoring content to fit
Europe’s political preferences. This from a bloc where free speech is already
under strain. Now Europe wants to make its censorship our problem, too.
Europe can’t have it both ways: relying on American
technological leadership while building an entire policy framework around
curbing it.
What makes this worse is Europe’s reluctance to take similar action against Chinese firms with
well-documented ties to the Chinese Communist Party. CCP-run companies such as
Huawei and ZTE continue to operate in European markets with little pushback.
Germany’s state-funded Deutsche Telekom still partners with China Unicom. The U.K.’s
Vodafone merged with a Chinese-owned company
just last year. 5G technology, critical for the future of global telecom
networks, is now increasingly under China’s control thanks to Europe’s
reluctance to act.
There is no strategic logic in punishing American
companies while giving CCP-linked firms a pass. The U.S. is doing what it can
to limit Chinese influence in global technology and protect Western national
security. But Europe is undermining that effort by deepening its own commercial
ties with Beijing.
None of this reflects a balanced partnership. It reflects
a coalition that wants the benefits of U.S. leadership without the obligations
that come with it.
It’s not unfair to stop others from taking advantage of
us. It is unfair to expect one side to keep sacrificing jobs, innovation, and
global standing to subsidize the other. If Europe is truly committed to
partnership, it should welcome a rebalancing — specifically, one that stops
targeting American tech innovation while rewarding its adversaries.
If not, then at least let’s stop pretending that the
current arrangement is anything but one-sided.
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