U.S.-EU Tech Tensions: Escalation or Diffusion

Critical Questions by Emily Benson

Published September 10, 2025

In an August 2025 Truth Social post, President Donald Trump wrote that he would retaliate against countries that impose digital regulation on U.S. companies. Retaliatory measures would include substantial tariffs and export restrictions on chips. These threats have heightened fears globally about the ability of foreign countries to maintain sovereign jurisdiction over domestically used technologies. These discussions-and fears-are not new. Because they have existed since the birth of the platform economy, this issue is unlikely to subside in the near term.

Q1: Will tensions over tech sovereignty between the United States and the European Union de-escalate over time?

A1: Tensions over technology regulation-traditionally negotiated through free trade agreements-are unlikely to dissipate over time. These disagreements are not new. The European Union governs primarily through the precautionary principle, which is the idea that technologies should not be deployed until proven safe for public use. The United States, on the other hand, has pursued an approach more closely aligned with the "move fast and break things" ethos, wherein technology is deployed and then regulated later if deemed harmful.

Both President Trump and Vice President JD Vance have been vocal opponents of deplatforming, which began in earnest when Trump was banned from what was then Twitter following January 6. The Biden administration also briefly stood up a Disinformation Governance Board that conservatives likened to a "Ministry of Truth." The Biden initiative only lasted three weeks amid accusations of "censorship." Especially with the First Amendment, which grants nearly absolute freedom of expression, matters of free speech are politically central to the U.S. governance system, which in turn colors broader bids to deregulate technology.

Political speech issues aside, there has been a longstanding and bipartisan view in Washington that EU regulation of U.S. tech companies is inherently discriminatory and that EU regulation is a net harm to transatlantic economic cooperation. The European Union, on the other hand, argues that what is illegal in real life should also be illegal online. Where the European Union is driven mostly by civil liberties considerations following a complicated history with twentieth-century autocracy and surveillance, the United States is motivated primarily by geopolitical and national security considerations. The United States views it as critical to international peace and security that allies and partners acquire U.S. technology over Chinese technology, and this belief extends into the platform economy.

Q2: How are U.S. technology companies handling current trade and tech tensions?

A2: U.S. tech companies are contending with two opposing forces. First, some companies may welcome the Trump administration's use of maximum leverage in negotiations. Companies-in particular, very large online platforms (VLOPs)-have long sought concessions from the European Union when it comes to regulating U.S.-origin technology. Current circumstances thus present an opportunity to push back against Europe's Digital Decade package and similar legislation in other jurisdictions, including efforts in the Republic of Korea to regulate large tech companies. While some VLOPs may prefer total revocation of the Digital Services Act and Digital Markets Act-respectively, content moderation requirements and antitrust measures-Brussels has repeatedly said it would not consider rescinding the measures. Brussels has indicated, however, that it would entertain ways to soften enforcement through changes in how the rules are implemented.

Q3: Does the European Union also regulate Chinese companies?

A3: While the "gatekeeper" rules for VLOPs were initially aimed at U.S. companies, EU rules have now extended to several Chinese companies, following the growth of Chinese companies in the European market. The European Union has launched investigations into AliExpress, Shein, Temu, and TikTok for privacy violations, market risks, and other illegal measures. The European Union determined in late July 2025 that Temu violated the DSA, a determination largely based on high-risk sales of unsafe products on the platform. In December 2024, the European Union launched its third investigation into TikTok over concerns relating to design, transparency, and election interference. European Union President von der Leyen stated, "It should be crystal clear that in the [European Union[, all online platforms, including TikTok, must be held accountable.

Another policy tool that governs connected technologies has been developed in the United States through the Office of Information and Communications Technology and Services under the Commerce Department's Bureau of Industry and Security. Established in 2018 under the International Emergency Economic Powers Act authority-the same statute invoked today to levy reciprocal tariffs-the program can levy import restrictions on connected devices. This could grow to cover not only connected vehicles and drones but also items like baby centers or even possibly data centers. This office has also tried to use the authority to regulate TikTok, though those efforts did not prevail. The European Union, meanwhile, does not have an equivalent measure that would restrict imports based on national security grounds, in part because national security remains a member state competency. If the European Union does ultimately design an equivalent tool, this could serve as an added method of regulating high-risk foreign technology in the European stack.

Q4: Could European de-risking and diversification harm U.S. technology providers?

A4: The European Union has a larger consumer base than the United States. (The European Union population is 450.5 million people in 2025, versus 341.1 million in the United States this year). With 27 member states, the European Union provides ample opportunity not only for commercial services growth but also for government contracts. Denmark and Germany have already begun to switch to open-source platforms to move away from U.S. technology companies amid dependency fears. Loss of European markets could bite top lines over time, but the European Union lacks ways to backfill for core advanced technologies, such as AI infrastructure.

Q5: How do digital concerns fit into trade negotiations?

A5: FTAs typically contain digital governance chapters. In the U.S. context, these have tended to restrict measures aimed at keeping data inside countries through data localization requirements, favoring the free flow of data across borders. Other countries have pursued digital services taxes, which aim to tax profits derived from the digital economy. Digital trade is also internationally governed through the WTO, including the e-commerce moratorium, which prevents members from applying duties on digital goods and services.

Emily Benson is a senior associate (non-resident) with the Europe, Russia, and Eurasia Program at the Center for Strategic and International Studies in Washington, D.C.

Critical Questions is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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