Trust on trial: A year of 'rebalancing' US-EU ties

Tech war

While some leaders praised the agreement for stabilizing the trans-Atlantic partnership, they failed to confront Trump's narrative that the objective of the EU-US trade negotiation was to address an unbalanced relationship, without referencing the large US surplus in services trade with Europe, especially the lucrative tech sector.

In 2024, trade in goods and services between the US and the EU stood at 1.68 trillion euros. Although the EU had a surplus of 198 billion euros over the US in trade in goods, it ran a deficit of almost 148 billion euros with regard to trade in services.

The top services the EU imports from the US include charges for the use of intellectual property; professional, scientific, and technical services; and telecommunications, computer, and information services.

In the digital sphere, the US and the EU have also engaged in another war over regulations and market access.

Since 2022, the EU has introduced and updated the Digital Services Act and the Digital Markets Act to tighten the operation of big tech companies in Europe. Authorities have since imposed fines ranging from millions to billions on Apple, Meta, and Google for abusing their dominant market positions.

The most prominent cases were a 1.8 billion euro fine on Apple for abusing its dominance regarding the distribution of music streaming apps to iPhone and iPad users through its App Store, and a 2.95 billion euro fine on Google for breaching EU antitrust rules by distorting competition in the advertising technology industry.

Understandably, Trump hit back immediately, writing on his Truth Social platform, "Digital taxes, legislation, rules or regulations are all designed to harm, or discriminate against, American technology."

Tom Wheeler, former chairman of the US Federal Communications Commission, described it as "digital mercantilism" in a commentary published by the Brookings think tank in Washington.

"American tech companies have largely avoided meaningful regulatory oversight in the United States," he wrote. "Now, President Trump has pledged to 'stand up' to countries that 'attack' them. This use of political power to protect favored companies can be seen as a modern-day version of mercantilism."

More recently, the United States Trade Representative warned of retaliation after the EU handed out roughly $140 million in fines to social media platform X — owned by the US billionaire Elon Musk — for violating digital transparency rules.

"If the EU and EU member states insist on continuing to restrict, limit, and deter the competitiveness of US service providers through discriminatory means, the United States will have no choice but to begin using every tool at its disposal to counter these unreasonable measures," the trade representative's office said on Dec 16.

It singled out potential European service providers that could be targeted by name, listing Accenture, DHL, Mistral, SAP, Siemens, and Spotify, among others.

Analysts said the tensions are unlikely to ease, given the growing dominance of nationalist politics in the US and their divergence from Europe's traditional political consensus.