The United States is aware of the enormous power of the digital economy. To maximize the United States’ profit potential in this area, the country’s trade negotiators are playing a clever game.
U.S. trade negotiators playing strip poker…
Their goal is to expand the global dominance of their data platforms such as Meta, Google, Amazon and Apple, by seeking to remove any conceivable restraints to maximizing their global revenue potential.
To that end, they are keen to move even legitimate competition, innovation, civic and other constitutional concerns out of way by means of a trade agreement that is preferably unilaterally imposed.
… but through the back door
To distract attention from this ultimate negotiating goal, their first move of U.S. trade negotiators is to offer their European trading partners small concessions in areas such as cars and agriculture.
As a second move, they routinely insert seemingly innocuous clauses into trade agreements that aim to further consolidate the dominance of U.S. technology giants.
In one agreement after another, including the Economic Prosperity Deal between the United States and the UK and the trade agreement with Mexico and Canada, Washington is inserting provisions on digital trade that sound insignificant at first glance.
In reality, these provisions aim to prohibit, not protect, data localization requirements that are crucial to preserving Europe’s digital sovereignty.
Germany as a U.S. pawn
In pursuing its negotiating strategy, Washington has long relied on the German government as a willing supporter of U.S. efforts to undermine cohesion within the EU.
The American lever in this is Germany’s fixation on maximum protection for the exports of its stagnating automotive industry. Such an obsession can blind a government to the big picture.
That would be a tragedy for Europe. On the one hand, the German automotive industry has made itself a victim through years of self-inflicted strategic mistakes. On the other hand, the long-term economic potential of this industry is rather modest compared to that of the digital economy.
One of the biggest strategic advantages for the U.S. side in this dispute is that Germany, despite being the EU’s largest economy, has long lacked a serious digital agenda at the government level. This also meant that it lacked the strategic depth to carefully weigh up the relevant decision-making factors.
Protecting Europe’s digital sovereignty
No one should be willing to sell Europe’s digital future for a few tariff concessions on car exports. Not to mention the consequences for the already greatly reduced sovereignty of European citizens.
This could drag the whole of Europe down with it into the abyss. Given the extremely aggressive stance of U.S. trade policy under Donald Trump, there is no doubt whatsoever that this would lead to an unacceptable undermining of the rule of law.
We Europeans would risk losing the ability to regulate our own data, tax digital services or build our own tech champions. It is a loss of sovereignty hidden in the fine print.
If Berlin were willing to play off Europe’s digital future against the interests of the German automotive industry, it would risk another Nord Stream 2 disaster. It would be an agreement that enshrines dependence, this time not on Russian gas, but on American technology.
Donald Trump’s wake-up call
Fortunately for everyone concerned about these issues, Donald Trump recently sent an unmistakable wake-up call not only to all Europeans, but the entire world.
He categorically stated on Truth Social that digital taxes, digital services laws and digital market regulations are all aimed at harming or discriminating against American technology and that he intends to impose tariffs and export restrictions on any countries that seek to do so.
Given Trump’s tendency to unilaterally change the terms of any trade agreement he has signed, at his own discretion and whenever he sees fit, it is simply not wise for Europe to give up fundamentally important digital rights in exchange for what may very well turn out to be only temporary concessions on industrial goods.
Why Europe must say no
If EU members want to maintain the hope that Europe can set its own rules in the age of AI and data-driven power, all EU members must oppose such an undertaking.
Giving in on this issue would have several negative consequences. It would make the EU even more dependent on U.S. platforms, undermine its already weakened potential to act as a global standard-setter and further weaken its ability to defend itself against the dominance of digital platform monopolies.
To maintain its leeway, Europe does not need to withdraw from trade with the United States. It must demand the right kind of agreement – and not one that takes away its freedom to regulate or levy taxes on business operations conducted inside the EU.
Fortunately, thanks to Trump’s wake-up call, which exposed the “stealth maneuver” of his negotiators, the position of the German government is also becoming smarter, as became clear at the recent Franco-German summit.
Europe has influence
If Washington refuses a sensible compromise, Europe also has influence. The United States has a large service surplus with the EU. And intellectual property protection could become a bargaining chip to give the European technology sector room to grow.
However, this will only work if Europe builds a much more integrated single market. The joint ministerial meeting between Germany and France also seems promising in this regard, with the potential to finally achieve significant progress. Yet, intra-EU frictions are pre-programmed.