EU refuses to weaken tech rules for US trade deal as tariff tensions persist

The European Union will not dismantle its digital rulebook to secure a trade agreement with the United States, the bloc's most senior technology official has made clear. Henna Virkkunen, the European Commission vice-president responsible for tech sovereignty, security and democracy, said the EU remains "very committed" to laws that regulate the world's largest platforms, regardless of pressure from the Trump administration or the American companies those laws affect most.

The statement comes as the transatlantic trade relationship enters a volatile phase. President Donald Trump announced a 90-day pause on the reciprocal tariffs he had threatened against dozens of trading partners, but a baseline 10% duty on most European goods remains, alongside 25% levies on cars, steel and aluminium. The Commission has matched the pause with a suspension of its own retaliatory measures, though Virkkunen said all options remain on the table if negotiations fail.

Rules apply equally, Commission insists

Virkkunen pushed back against the characterisation of EU digital legislation as a trade barrier. "We are not specially targeting certain companies, but we have this risk-based approach in all our rules," she said in interviews with European newspapers including the Guardian. The Digital Markets Act (DMA) and Digital Services Act (DSA) apply to any firm meeting the statutory thresholds, regardless of nationality. Because American companies dominate the relevant markets, they shoulder a disproportionate share of the obligations. "When you are a bigger player, then there are more obligations, because you are posing a bigger risk," Virkkunen explained.

That logic has not persuaded critics in Washington. Peter Navarro, Trump's senior trade adviser, published a litany of complaints in the Financial Times accusing the EU of waging "lawfare" against US tech champions. Mark Zuckerberg, chief executive of Meta, went further, claiming the bloc is "institutionalising censorship". Trump himself has attacked European decisions to fine and investigate Apple and Meta. The Commission's response has been procedural: investigations continue under both the DMA and the DSA.

Open investigations and the fine question

The Commission is currently investigating Alphabet, Apple and Meta for potential breaches of the Digital Markets Act, which aims to prevent dominant platforms from crowding out smaller rivals. Separately, X and Meta face proceedings under the Digital Services Act, which targets systemic risks such as disinformation and illegal content. In March, the Commission issued preliminary findings against Apple and Alphabet, alleging anti-competitive behaviour.

Reports have suggested X could face a fine exceeding $1 billion. Virkkunen downplayed the financial dimension. "Our goal in these investigations and proceedings is not to impose big fines. Our goal is to make sure that all the companies are complying with our rules," she said. The distinction matters: the DMA allows penalties up to 10% of global turnover for non-compliance, rising to 20% for repeated infringements. The DSA caps fines at 6%. For companies of this scale, the sums are substantial, but the Commission's stated objective is behavioural change.

Retaliation options prepared but unspecified

France has led calls within the Council to consider countermeasures aimed at US technology firms if the tariff dispute escalates. Virkkunen confirmed that "different options" for retaliation have been prepared in consultation with member states, but declined to speculate on their nature. The mere existence of such options signals that the digital sphere could become a bargaining chip in a broader trade war, even as the Commission publicly insists its regulatory agenda is independent of commercial diplomacy.

The tension is not new. The EU has spent the better part of a decade constructing a regulatory framework that treats digital markets as requiring bespoke oversight. The General Data Protection Regulation (GDPR) took effect in 2018. The DMA and DSA entered into force in 2022 and 2023 respectively, with full application from 2024. The AI Act, the world's first comprehensive law on artificial intelligence, was adopted in 2024 and applies in phases through 2027. Each piece of legislation reflects a deliberate choice to set European standards rather than adopt American or Chinese models.

Europe's technology deficit

Virkkunen acknowledged the uncomfortable backdrop: Europe's digital economy remains heavily dependent on foreign infrastructure and innovation. "We are lagging very much behind because 80% of our technology is coming outside of the European Union, so there's a lot of work ahead of us," she said. The figure underscores a structural weakness. European cloud providers hold a fraction of the market dominated by Amazon Web Services, Microsoft Azure and Google Cloud. European semiconductor production is negligible compared with Taiwan, South Korea and the United States. In artificial intelligence, the gap is stark: the largest foundation models are trained on American supercomputers using American capital.

To address the deficit, the Commission this week outlined a strategy to create up to five AI gigafactories, sites equipped with vast supercomputing capacity to test and develop models within the EU. The initiative is part of a broader push for "tech sovereignty", a term that has migrated from French political discourse into the Commission's official vocabulary. The ambition is to reduce strategic dependence, but the price tag is considerable. Public funding will need to leverage private investment at a time when European venture capital markets remain shallow compared with their US counterparts.

AI Act implementation and copyright concerns

The AI Act has sparked a separate confrontation. Writers, musicians and other creatives argue the legislation offers insufficient protection against generative AI systems that ingest copyrighted works, books, articles, songs, images, to train their models. Virkkunen acknowledged the gap in tacit terms: "It looks that now further steps have to be taken here." She emphasised the need for a solution that ensures rightsholders receive fair compensation while also allowing European content to be used in training. "I see that it's also problematic if European content is not used for training AI," she added.

The Commission is examining licensing models that could bridge the divide. Collective licensing, extended collective licensing, and statutory remuneration schemes are among the options under study. The challenge is to design a mechanism that works across 27 member states with divergent copyright traditions, without creating a de facto obligation to license that would undermine the text and data mining exception the AI Act carefully calibrated. The outcome will shape whether Europe's creative industries view the AI Act as protection or capitulation.

Innovation-friendly rhetoric meets regulatory reality

Vrikkunen has signalled a willingness to implement the AI Act in an "innovation-friendly manner" and to support small and medium-sized enterprises in complying with the rules. Consumer groups have reacted with alarm, fearing that "innovation-friendly" is code for weakening enforcement. The tension is real: the same Commission that boasts of the world's most ambitious digital rulebook now faces pressure to prove that regulation does not strangle the very sector it seeks to govern. Virkkunen's portfolio, tech sovereignty, security, democracy, border control, reflects the political imperative to demonstrate that European regulation delivers European competitiveness.

The trade dimension complicates the calculus. If the EU concedes on enforcement to appease Washington, it risks undermining the credibility of a regulatory model that other jurisdictions, from Brazil to Japan, are studying or emulating. If it holds firm, it invites further tariff escalation and political retaliation against European exporters in agriculture, automotive and machinery. The 90-day pause buys time, but the underlying conflict, between a rules-based European approach and a transactional American one, is structural.