Often untethered to unfair foreign trade practices, President Donald Trump’s fetish for tariffs is foolish. Tariffs reduce prosperity and opportunity for the vast majority of the public in order to benefit far smaller numbers of Americans in specific industries. Still, tariffs have value when it comes to penalizing unfair economic activity by U.S. trade partners. Trump is thus right to now threaten new tariffs on the European Union and European nations over their threat to American technology companies.
In a social media post last Friday, Trump warned that European countries were discussing the “imminent” introduction of digital services taxes on U.S. technology giants. He added that any “country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the [U.S.].” While Trump’s 100% tariff rate is arbitrary, he is right to warn of robust action. Contrary to their claims of justified regulation, the European digital taxes in question serve a simple and wholly unjustified purpose: extorting American companies.
European governments see punitive taxes on U.S. technology giants such as Google, Microsoft, Amazon, Netflix, Meta, and X both as a way to generate revenue and to help boost their own struggling technology companies. Bloated by their vast welfare budgets and having hamstrung the development of indigenous tech start-ups with their heavy regulations, EU governments see hitting the Americans as an easy way out. As in the case of France, this tax effort is often nakedly protectionist, reflecting a long-standing French industrial strategy, heavily supported by its DGSE intelligence service, that views the United States as an economic adversary. But Denmark, Poland, and Portugal also have similar tax systems in place. As Trump notes, other European countries are considering their own action.
It is no coincidence that these efforts have been pushed by leftist anti-American European elites such as Thierry Breton. But when it comes to justifying these taxes, the excuses offered are often farcical. In 2024, for example, the EU justified its fines against X (formerly Twitter) by claiming the social media platform was harming consumer choice in allowing users to purchase verified (blue checkmark) status.
It would be much better if U.S.-EU engagement were now focused on consolidating the trade deal reached last year. But the U.S. cannot sit idle amid this digital services tax injustice. As I argued last year when the EU imposed nearly $1 billion in fines on American technology companies, “The objective [of U.S. retaliatory tariffs] would not be to build momentum for yet another trade war. Instead, it would be for the U.S. to protect its own interests alongside growing and mutually beneficial U.S.-EU trade. The two concerns must go together. Trump is wrong about generalized tariffs, but he has the responsibility to protect American businesses from unfair treatment abroad.”
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Unfortunately, however, it seems that Trump will have to take action. A European Commission spokesperson gave no ground on Monday, stating, “Our position is very clear, the EU and its member states have the sovereign right to regulate any economic activities on their territory.” The spokesperson added that the EU would respond “swiftly and decisively” to any U.S. action targeting the “legitimate” activity.
It is indeed legitimate for the EU to introduce whatever laws and taxes its parliament and those of its subordinate member states are willing to pass. But only a fool would expect a U.S. president to sit idle in defense of legitimate American interests.