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The EU is thinking of hitting US service exports, including Big Tech operations, to avenge Donald Trump by imposing 25 percent fees on the car industry and promising a further round of measures next week.
Brussels has already discovered additional tasks up to 26BN of US goods after Washington set steel and aluminum tariffs. But European officials and diplomats said the degree of action by the Trump administration demanded that it consider using the most powerful trade means.
The bloc has extensive powers to suspend intellectual property rights and to exclude companies from public procurement contracts under its enforcement regulation, which was strengthened in 2021 after a trade conflict with the first Trump administration.
“Americans think they are those with the predominance of escalation (in the trade war), but we also have the ability to do it,” an EU diplomat said, adding that the goal was ultimately to escalate with a comprehensive trade agreement.
A relapse can include restrictions on the intellectual property of large technology companies. Another example would be to stop Elon Musk’s Starlink satellite network to win government contracts. Italy is already reconsidering whether to win the system.
“The services are where the US is tangible,” said a second diplomat. Washington led a trade surplus of € 109 billion with the EU in services in 2023, compared to a 157bn € deficit in goods.
EU officials believe that the Trump administration will be ready to negotiate only after the US has set up a tariff wall that would demonstrate that it is serious to provide better conditions from trading partners who are allegedly benefiting from its open market.
European officials hope to make quick progress in an eventual agreement, but they admit it would not remove all the additional tariffs set by Trump.
“The thought is that we have to answer. It’s the only way to get a deal,” said a third EU diplomat. “We tried to talk.”
Since EU exports exceed its imports, the block would fight to match US tariffs for goods. Brussels also does not want to stop gas supplies from the US on the continent.
“There are only so many imports of goods from the SH.BA as the EU can aim before that it greatly damages the economy,” said David Henig, from the European Center for International Political Economy Think-tank. “If you do not want to target energy, there is a limit of what can be done for goods. While in services there is greater space for revenge without much harm to the economy.”
Some experts say that in order to cause more economic pain in the US, the European Commission will have to use its anti-CERTION (ACI) instrument, called “commercial bazooks”.
This tool can limit US bank activities, revoke patents or prevent companies receiving income from software updates or broadcasting.
“I would advise the European Commission to use ACI,” said Ignacio García Bercero, a former senior commission official who led negotiations on a US-EU trade agreement, the transatlantic partnership of trade and investment that were summarized without an agreement.
Anyway the vengeance taken by the EU would be drafted by the Commission, but must be approved by a weighted majority of the Member States.
EU countries are still negotiating the revenge list of goods compiled in response to Trump’s steel and aluminum tariffs; France has pressured Bourbon whiskey to be removed to avoid the consequences for its beverage industry.
The commission has delayed measures, which also cover jeans, motorcycles and possibly Soyabeans, until April 12. They will be discussed with national leaders before a final agreement.
Diplomats and officials said there was room for more goods fees in response to any American “reciprocal” fee to be approved by the White House next week and is expected from Brussels to be about 20 percent. The aircraft, chemicals and pharmaceutical products can be hit.
