EU Cracks Down on Big Tech: Will US Services Exports Be Affected? Find Out Here!

The European Union’s Response to US Tariffs: Navigating the Trade War

Amidst the escalating trade tensions between the U.S. and the European Union (EU), the EU is considering retaliatory measures against American services exports in response to President Donald Trump’s tariff impositions on the car industry. The tit-for-tat tariffs have already resulted in additional levies on up to €26 billion of U.S. goods by Brussels, pushing European officials to explore more robust trade tools in their arsenal.

1. Powerful Trade Tools:
   • The EU’s Enforcement Regulation grants broad authority to suspend intellectual property rights and exclude companies from public procurement contracts.
   • These tools were reinforced in 2021 after a trade conflict with the previous Trump administration, enabling the EU to challenge U.S. trade actions effectively.
2. Vulnerability of U.S. Services Sector:
   • Services exports are identified as a vulnerable spot for the U.S. in the trade war with the EU.
   • The U.S. ran a €109 billion trade surplus in services with the EU in 2023, highlighting a significant area of potential retaliation for the EU.
3. Existing Tariffs and Negotiations:
   • EU officials are hopeful of initiating negotiations for a comprehensive trade deal to de-escalate tensions with the U.S.
   • The EU aims to respond to U.S. actions and secure better terms through dialogue.

In a bid to inflict additional economic pressure on the U.S., there are talks of utilizing the EU’s anti-coercion instrument (ACI), popularly known as the “trade bazooka.” This tool could potentially restrict the activities of U.S. banks, revoke patents, or hinder companies from receiving revenues from various sources.

Ultimately, any retaliatory measures contemplated by the EU would need to be ratified by a majority of member states after being drafted by the European Commission. The looming threat of U.S. tariffs necessitates careful consideration of potential goods to target in response, including aircraft, chemicals, and pharmaceutical products.

As the trade war escalates, the EU is strategically weighing its options to navigate the uncertain terrain of international trade negotiations. By balancing its economic interests with strategic responses, the EU aims to find a pathway towards resolving trade disputes with the U.S.