President Donald Trump is set to meet Sunday with European Commission President Ursula von der Leyen to continue talks on a trade deal.
Ahead of that meeting, policy analysts say that any agreement on trade must include the removal of non-tariff regulations and digital service taxes that largely target U.S. tech and communications companies.
Joe Grogan, president of Public Policy Solutions and former Domestic Policy Council chief in the first Trump administration, told The Center Square in a statement that, “For decades, the European Union has attacked the United States with unfair regulations, taxes and fees. Given America’s tech leadership, our digital policy is trade policy, and any trade deal should address non-tariff barriers like digital services taxes to end the protectionist approach to these American innovators. To pay more than lip service to freedom and free markets, the EU must remove its burdensome bans and regulations on American companies.”
Digital service taxes (DSTs) are taxes levied by countries on gross revenues of international companies rather than on the companies’ profits, according to the Tax Foundation. They are meant to force large U.S.-based companies such as Google, Amazon, Meta, streaming services and others to contribute to a country’s tax base even if they don’t have physical operations in those countries.
In a report released last month, Public Policy Solutions said European countries target U.S. technology and telecommunications companies in three primary ways: they promote “purchases with European digital companies instead of facilitating a free market;” they force U.S. digital companies to pay high fees and taxes; and they place “burdensome regulations and restrictions” on them.
Canada last month considered a digital services tax on U.S. companies but quickly backed off, realizing it would escalate the ongoing trade dispute between the two border nations.
Michael Toth, a research fellow at the Civitas Institute at the University of Texas at Austin, similarly told The Center Square that eliminating Europe’s digital services taxes and regulatory burdens must be a part of any U.S.-Europe trade deal.
“They’re looking at these American companies like an ATM,” Toth said. “‘So why not tax these businesses in other countries instead of our own.’ It impacts [American companies’] bottom line. It means they have these additional costs just for the privilege of doing business there” in Europe.
Toth said the Trump administration is using the threat of tariffs on European goods imported into the U.S. to help level the playing field.
“What the administration is saying, ‘hey wait a second. Everyone wants to do business with American companies.’ So we have a lot of leverage,” Toth said. “That’s not something our companies should have to pay for. It should be a big part of any deal that comes together.”
Toth also told The Center Square that European countries penalize American companies for not following Europe’s excessively burdensome environmental and other regulations.
“When EU regulators hit Apple and Meta with $800 million in fines last month, a Meta spokesperson called out the European money grab for what it is – ‘a multi-billion-dollar tariff’ on American companies,” Toth wrote in The Hill in June.
“These fines do not take into account the enormous day-to-day compliance costs that U.S. firms must pay for the privilege of doing business in the Eurozone. Staying on top of EU digital rules runs Alphabet, Apple, Meta, Amazon and Microsoft $2.2 billion annually. American companies are forecasted to forgo more than $2 trillion of revenue due to Europe’s massive regulatory burden.”
Toth told The Center Square that these regulations also need to be addressed in any trade deal.
“The administration is smart to hit the reset button,” he said. “The EU markets will then be much more open to American products.”
