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EU Weighs Digital Taxes on US Tech Firms Amid Trade Tensions
Brussels is considering imposing fresh digital levies on major American technology companies, including Google and Meta, if trade discussions with the United States falter under former President Trump, according to a high-ranking European Union official. This potential action signals escalating trade friction and highlights the EU’s resolve to defend its digital policies.
Von der Leyen Warns of Countermeasures
Ursula von der Leyen, the president of the European Commission, the EU’s executive body, issued this caution after Trump recently agreed to a temporary, 90-day suspension of reciprocal tariffs against the EU and other nations—excluding China—to facilitate trade agreement negotiations.
In an interview with the Financial Times, von der Leyen stated, “We are formulating countermeasures.” She elaborated, “A diverse array of retaliatory options are being developed… should negotiations prove unsatisfactory.”
Potential Digital Levy on Tech Advertising Revenue
One such option under consideration is to “apply a levy to the advertising revenues of digital platforms,” von der Leyen disclosed. This measure directly targets the revenue streams of companies like Google and Meta, which heavily rely on digital advertising for the majority of their earnings.
Anti-Coercion Instrument as a Tool
Von der Leyen indicated that the EU could utilize its Anti-Coercion Instrument to target Big Tech entities. This mechanism, inspired by the 1974 US Trade Act but as yet untested, requires approval from the 27 EU member states. If invoked, it would empower the European Commission with considerable authority to restrict US commerce within the continent.
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Current Trade Tariffs and “Inflection Point”
The backdrop to these discussions includes existing trade tensions, with the US having previously instated a 10% duty on all EU exports to the nation, alongside a 25% tariff on imported vehicles, auto components, steel, and aluminum.
The European Commission president characterized the present trade landscape as a “significant inflection point in global commerce.”
“It marks a turning point in relations with the United States, unequivocally,” she conveyed to the Financial Times. “A return to the previous state of affairs is no longer conceivable.”
EU Expected to Proceed with Fines Under Digital Markets Act
As previously reported, the EU is also anticipated to move forward with substantial financial penalties against Google and Apple for infringements of its Digital Markets Act (DMA). The DMA is a comprehensive digital competition law designed to impose limitations on dominant online platforms.
High-ranking EU officials have emphasized that these impending fines and ongoing trade tariff discussions are “entirely separate processes.” They affirmed there would be no preferential treatment or special concessions for the US concerning technology matters.
Announcements regarding these fines could occur as early as this week or the following week.
Significant Fines Anticipated for Meta and Apple
Sources suggest that the fine against Meta could surpass $1 billion. The potential magnitude of the fine against Apple remains undisclosed.
DMA Targets Primarily US Firms
Notably, six of the seven companies currently subject to the DMA’s regulations are based in the United States.
Both Meta’s Mark Zuckerberg and former President Trump have publicly voiced criticism of the EU legislation, with Trump labeling it “overseas extortion.”
Trump has cautioned that any further EU measures specifically targeting the US tech sector would be met with robust retaliation from the United States.
European Commission’s Authority on Trade and Antitrust
Based in Brussels, the European Commission holds exclusive jurisdiction over EU trade and antitrust policy. It possesses the authority to impose fines on technology companies reaching up to 10% of their global revenue for non-compliance with the DMA.
However, initial penalties enforced under the DMA, which became effective in 2023, are not projected to reach such maximum levels.