Trump Targets EU Regulations and ‘Taxation’ of American Companies

By David Inserra & Jennifer Huddleston

Friday, January 31, 2025

 

Last week, President Donald Trump took the stage (virtually) at the World Economic Forum in Davos and proceeded to blast the EU for the impact their regulations are having on U.S. companies and American expression online.

 

Trump is absolutely right. For years now, EU policymakers, bureaucrats, and courts have been crushing their own member countries and American tech companies under the weight of onerous and censorious regulations that, as Trump put it, are “a form of taxation.”

 

But, having rightly identified the EU as a bad actor, President Trump and American policymakers must also resist the siren song to respond with our own taxes, tariffs, regulations, and “competition” policies that will cripple American businesses and harm the expression and pocketbooks of American citizens. The most obvious example of this is in the tech sector.

 

Europe’s chief technology export has effectively become its regulation, and President Trump is right that much of it directly targets American companies. Examples abound, from massive policies such as the General Data Protection Regulation (GDPR), the Digital Markets Act (DMA), the Digital Services Act (DSA), and the AI Act. Each governs the global tech-policy ecosystem, down to micromanaging which charging port smartphone companies must design into their devices through the EU’s Common Charger Directive. These myriad rules have imposed major costs on technological innovation and affect American companies’ ability to do business as well as American citizens’ ability to choose.

 

These regulations are part of why the EU’s tech sector has lagged. Start-up culture thrives in the U.S. — of the 49 start-ups worth more than $10 billion, only one is from the EU. There may be a growing realization that the EU is falling behind as its host of taxes and regulations strangle economic growth and dynamism. Nonetheless, its tech policy has focused on punishing successful American companies rather than examining how a precautionary approach has stifled its own.

 

The DMA, for example, has weaponized competition policy by labeling successful American tech companies as “gatekeepers,” preventing them from undertaking certain actions or otherwise offering the products and services that consumers prefer. Consumers in Europe have faced a number of “DMA fails” such as changes to Google Maps and smartphones that require an increasing number of steps for setup. The results haven’t benefited Europe either, with companies choosing not to launch new products. There are other negative impacts in some industries that the policy was designed to benefit.

 

European competition regulators have targeted leading American companies for their success by taking antitrust actions that do not accurately reflect the typical consumer experience or the dynamic nature of the market. The consequences of these misguided actions could eliminate the features that consumers want or prevent potential benefits from mergers. Concerningly, the prior FTC appeared to collude with European regulators to target American companies when the FTC was unsuccessful doing so at home. The impact of such rules extends beyond innovation and business and quickly turns into censorship. A significant example is former EU commissioner Thierry Breton’s threat to Elon Musk, which occurred during Musk’s “X spaces” interview with President Trump shortly before the 2024 election. Breton warned Musk that since EU users will listen to this live conversation and be subject to content that promotes “hatred, disorder, incitement to violence, or . . . disinformation,” the DSA required Musk to “mitigate” these harms. Failure to do so would be used against X in the EU’s ongoing prosecution of the platform for failing to moderate to the EU’s satisfaction.

 

That a high-level EU official felt it was appropriate to threaten an American citizen using an American tech platform to interview an American politician ahead of an American election is more than just foreign censorship run amok — it reeks of so-called foreign election interference, interference that the EU claims is a grave threat to democracy.

 

The EU’s censoriousness runs beyond these high-profile examples. It is at work in countless small moments in which American tech companies have felt the boot of EU regulators who threatened them with large fines if they didn’t run their platforms and moderate content as Brussels saw fit. Such pressure affects the overall approach companies take to content moderation.

 

For all these reasons, President Trump is right to call out the EU’s regulatory scheme as a large-scale grift intent on forcing EU views on American companies. Tariffs on French wine, Italian cheeses, or German autos may seem to hit the EU where it hurts, but tariffs would also penalize American consumers and fail to address the policy issues at hand.

 

The EU is apparently intent on crippling its own economy, silencing speakers, and stifling innovation. But that doesn’t mean the U.S. should shoot itself in the foot, too. Instead, the U.S. should illustrate the benefits of a light-touch approach to American innovation, support our companies that are standing up to regulation abroad, and resist the siren song to engage in similar regulations on antitrust and speech at home.