Report from Bloomberg
In Brief – The framework US–EU trade deal reached by US President Donald Trump and European Commission President Ursula von der Leyen does not include a pledge to end EU digital services taxes (DST) or moderate European regulation of digital giants. However, US Commerce Secretary Howard Lutnick, who played a central role in the talks, said some unaddressed issues are still up for discussion with “plenty of horse trading left to do”, including ending the EU “attack on our tech companies”, citing EU priorities “like steel and aluminum that were not included in this deal”.
Context – On one hand, the initial US-EU framework agreement does not address any digital policy issues, but that’s not a huge setback for the US digital giants or even the broader US tech industry because a complete meltdown of US-EU economic relations would not have benefited global companies with huge earnings in Europe. Furthermore, US tech companies were a big retaliation target for the EU’s “anti-coercion instrument” if things spun out of control. Instead, if past is prologue with President Trump, no trade matter is ever completely closed. Tariff threats are always on the table. The Administration will continue to argue that EU digital regulations (DMA, DSA, and AI Act) discriminate against American businesses. While we don’t expect any DMA or DSA legislative changes, the Commission would be wise to moderate fines to avoid exacerbating a situation that is never truly final. And while the Trump-Musk Era is over, online speech limits remains an explosive issue with influential conservative populists in the US who have built ideological alliances in Europe. So, X’s DSA case is still a real tripwire. And US digital companies can and will continue to press the Administration to double down on digital services taxes. The UK’s DST was not resolved in that framework deal, but it is reportedly still part of ongoing talks, so there is that example. If you are looking for a bilateral trade negotiation with a digital issue playing a more central role, look to Brazil and claims of online “censorship”.