How Europe Can Expand Digital Trade to Challenge Big Tech’s Anti-Regulatory Push

This piece is part of the "Ideas for Europe’s Future" series by Tech Policy Press. Read more about the series here.

A defining feature of United States President Donald Trump’s foreign policy in his second term has been his weaponization of trade policy and extortion of other countries to get them to rig the global economy in favor of US companies. His demands extend far beyond getting countries to remove tariffs on US exports. He has increasingly targeted national regulations that his administration sees as harming US companies, and by extension, the US itself. In particular, Trump has attacked Europe’s tech policies—from its proposed digital service taxes to its signature digital market regulations—which prevent the Big Tech platforms from having the same free rein in the European digital economy as they do in the US.

As European leaders recognized, these demands from the American president represent nothing less than an attack on other governments’ sovereign right to regulate their societies based on their national laws and the public demands of their people—a right that is a cornerstone of international rule of law.

Nevertheless, as unprecedented as Trump’s actions are in their audacity, many of his tactics are simply an amplified version of ones that tech companies have long been seeding through US trade policy. Defenders of a rules-based international order in Europe and elsewhere must therefore recognize that Big Tech’s anti-regulatory agenda will outlast the Trump Administration so long as trade policy remains a mechanism through which the US and others can restrict governments’ tech policy choices.

Even without a leader like Trump at the helm, trade policy is predisposed to being used to restrict governments’ policy options. After all, the primary purpose of trade negotiations is to get governments to remove policies, like tariffs, that impede cross-border commerce. Since global tariff rates sat at historic lows for much of the past four decades (until Trump’s election), a major focus of trade policymakers has, for years, been on removing “non-tariff” barriers—including the discrepancies between countries' regulatory regimes that could complicate a business’s efforts to operate across multiple jurisdictions.

These efforts to “harmonize” countries’ regulations have traditionally worked in one of two ways. On one hand, trade agreements raise labor and environmental standards across countries, setting a floor under governments’ regulatory choices.

On the other hand, many agreements also empower multinational companies to sue governments in private tribunals for introducing policies that threaten their financial interests. Even though these agreements include exceptions that allow governments to regulate in the public interest, in practice, trade law and adjudication processes make it extremely costly, if not impossible, for governments to use these loopholes. For many governments, the threat of a trade-related lawsuit can be enough to place a ceiling on their regulatory ambitions—even if new policies would be broadly popular among their electorate and sanctioned by their national courts.

The language that is now the standard for regulating trade in the tech sector draws heavily from a free trade paradigm with near-unquestioned faith in the benefits of enabling companies to move ever more goods, ideas, and money across borders, and deep suspicion of government policies that might disrupt these flows. When the Barack Obama administration, working closely with Silicon Valley leaders, first drafted this language for the Trans-Pacific Partnership (TPP), they included rules requiring signatory governments to allow data to freely flow across borders, prohibiting them from requiring data to be stored on local servers, and restricting their ability to regulate or require disclosures of tech companies’ source code and algorithms.

All told, digital trade agreements focus almost exclusively on the threat of government-erected barriers to the movement of data across borders—as China did with its “Great Firewall.” What they entirely overlook are the ways that tech companies can threaten trade in the global digital economy by, for example, building platforms and marketplaces that restrict the access that companies from other industries have to a country’s online consumers.

Although President Trump withdrew from the TPP on the first day of his first term, the Big Tech-endorsed language survived in numerous trade agreements subsequently negotiated by TPP members—including the US-Mexico-Canada Agreement (USMCA) that was the signature trade agreement of Trump’s first term. This language has become so common in trade negotiations that even Europe is now including this language in its bilateral digital trade negotiations with countries like Singapore and South Korea.

Of particular concern in these agreements are the “nondiscrimination” clauses, which prohibit policies that unfairly target companies from a given trade partner. Nondiscrimination is a standard principle in trade law, but when applied to the tech industry, where the globally dominant players all come from the same country, it creates the opportunity for these companies to argue that tech regulations violate trade law because they disproportionately impact American companies.

The growing proliferation of governments party to trade agreements that include this digital trade language was thus, in effect, creating a global mechanism through which Big Tech companies would be able to call on a sympathetic US administration to initiate trade disputes challenging other governments’ tech regulations on their behalf. These trade agreements might not be a good mechanism for unwinding existing legislation, like the DMA, but the risk stifles new policymaking, including rapidly developing areas like AI.

An early warning that the US was waking up to this new power came in 2024, when the Biden Administration accused Canada of violating its nondiscrimination commitments under the USMCA by enacting a digital services tax. Shortly afterwards, South Korean competition authorities walked back a proposed replica of the EU’s Digital Markets Act after Republican leaders depicted it as an unfair attack on US companies—despite being explicitly designed to regulate Korean platforms—and warned of potential economic retaliation from the US should it be implemented.

In Donald Trump—a man who equates US companies’ global market power as a reflection of US geopolitical power— Silicon Valley found the perfect ally in their perpetual anti-regulatory crusade. Trump does not, of course, have the patience or inclination to exert US power through these carefully crafted treaty commitments, and has instead unilaterally attacked countries’ tech regulations without any pretense of working to uphold the international rule of law. It is telling, however, that in depicting EU regulations as “unfair” and “discriminatory” to US companies, he is drawing on the narrative groundwork that Silicon Valley has been laying globally through trade agreements for years.

Moving away from anti-regulatory trade policy does not mean that European governments must abandon their commitments to protecting the free flow of information and communications through digital channels. Instead, Europe must broaden the terms of digital trade conversations to include considerations for the diverse stakeholders, from content creators to software consumers, who are harmed when tech companies leverage their control over the infrastructure of the digital economy to benefit themselves.

A first step must be for Europe to stop signing on to trade agreements that restrict its future policy options. Meanwhile, they must fight against the portrayal of tech regulations as barriers to trade, and instead advertise the ways that the DMA and other policies in fact strengthen digital trade by protecting fair digital market access for stakeholders from around the world.

Looking ahead, Europe should look to create new multi-disciplinary venues for collaborating with other democratic governments to define common values and priorities for the global digital economy—as seen in the Declaration for the Future of the Internet or the values-driven digital trade language proposed during Indo-Pacific Economic Framework (IPEF) negotiations.

With his assault on European tech regulation, President Trump has laid bare the ultimate aims of the tech industry in discussions of digital trade. European leaders must use the clarity of this moment to take the lead in introducing checks on Big Tech, and by extension, the US chokehold over the global digital economy.