The EU-U.S. discord over tariffs and digital regulations is still unresolved

Notwithstanding the bonhomie and friendly give-and-take of the past, the United States and the European Union have not yet reached an agreement on tariffs and trade laws.

During the summer meeting between US President Donald Trump and Ursula von der Leyen, the President of the European Commission, the EU could get the tariffs reduced to a general rate of 15%; however, the continuing 50% U.S. tariffs on European steel and other industrial products have alarmed Europe’s export-dependent heavy industry.

But other European product categories, such as food, face high tariffs in the US, which is the biggest market, outside the EU, for European food products. High tariffs on French wine, Italian pasta, and other food products make their end prices prohibitive in the US. Trump has been critical of Italy for selling pasta products at dumping prices in the US.

Brussels is presently trying to extract tariff reductions, particularly on steel and food exports. The US wants, in return, EU concessions for US digital giants in Europe, like Google, Apple, Microsoft, Amazon, etc.

US digital players have been asked to pay hundreds of millions of Euros, with the EU Commission accusing them of misusing their dominant position and threatening them with new digital taxes under the EU’s strict digital laws. Europe’s Digital Services Act (DSA), aimed at protecting the consumer’s fundamental rights and creating a safe digital space, regulates online services such as social media, marketplaces, app stores, and online travel and accommodation services, affecting Shein, Instagram, X, TikTok, LinkedIn, and Booking.com. The Digital Markets Act (DMA) enforces strict regulations, which are a major irritation for the digital giants.

US Commerce Secretary Howard Lutnick, who held talks in Brussels last week, said that the “aggressive” enforcement of these regulations against US corporations was wrong and urged the EU to relax the digital regulations. Trump had, in fact, threatened in September to impose retaliatory tariffs in response to the $2.95 billion penalty slapped against Google.

US Trade Representative Jamieson Greer, who also participated in the Brussels talks, expressed concern over the DMA and similar legislation in the EU, pointing out that many U.S. companies were “almost exclusively affected” and that “enforcement is quite aggressive at times and fines can be high”. The EU, which has resisted U.S. pressure, faces growing pressure from member states as

US tariffs are hurting them, and they are becoming alienated over Brussels’ uncompromising stand.

Lutnick’s Sweetener

Addressing journalists in Brussels, Lutnick offered to reduce tariffs on European steel and aluminum if the EU relaxed and “adjusted” the digital regulations: the US, he said, wanted to expand EU-US trade, though on a “fair basis”. Lutnick argued that meeting the needs of the digital corporations could attract huge investments to Europe, just as it had happened in the US.

Under the deal reached in the summer, the EU would purchase US liquid natural gas, oil, and atomic energy products at an estimated value of $750 billion, US-manufactured chips for artificial intelligence valued at $40 billion, while EU companies would invest by 2028 an additional $600 bn in strategically important sectors in the US.

EU’s chief negotiator and trade commissioner, Maros Sefcovic, pointed out that the EU’s energy purchases from the US amounted to some $200 billion alone this year. The EU’s share of LNG purchases has risen from 45% to 60%, with long-term contracts raising hopes of further increasing future US energy purchases.

Tariffs Have Hit Germans and Other Europeans in Different Ways

German economics minister Katherina Reiche, who had a separate meeting with Lutnick and Greer, called for expeditious implementation of the agreement worked out in July to facilitate long-term investment. The EU-US trade amounting to some 1.68 trillion euros accounted for nearly 30% of the global trade in goods and services. Reiche emphasized the need to strengthen Europe’s trading ties, for example, with other countries, particularly India, to reduce dependence on the US market. Indeed, there is considerable disappointment in Germany over US tariffs, with many Germans saying that they would expect better treatment from the US, an ally and a friend.

Meanwhile, the EU, like the US, doubled its tariffs in October on foreign steel to protect Europe’s steel industry from Chinese steel dumping. German experts do not rule out a decline in global breakbulk shipments following the US and EU tariffs.

Tariffs Are Also Hurting Other Sectors Such as Food

Italian pasta products, for example, face 91.74% tariffs in the US, over and above the 15% already in place, raising the total tariff level to 107%. This “super tariff”, to be enforced in early 2026, will have a “devastating economic effect”, European critics say.

Spain, on the other hand, faces tariffs on its olive oil exports. Spain’s economics minister, Carlos Cuerpo, argued that since the US produces only 2% of its olive oil consumption, it was important for the US to get “tariff-free access to this product … it is also beneficial for our producers.

Anger and disappointment generally characterize Europe’s reaction to US tariffs, amid calls to impose retaliatory tariffs on US products. Yet, both sides recognize their mutual economic and trade interdependence. The European Council (EC) calls the transatlantic relationship a “key artery” of the world economic system, with both sides accounting for 30% of global trade in goods and services, and 43% of the world’s GDP. In 2024, US-EU trade in goods and services reached 1.68 trillion Euros; the EC estimates that goods and services worth over 4.6 billion Euros cross the Atlantic every day.

Europe’s Major Exports to the US Declined

The EU’s pharmaceuticals and automobile sectors recorded the biggest export decline after Trump’s new tariffs. In July 2025, US imports of European pharmaceuticals fell to $9.5bn (€8.2 bn), compared to $11.5 bn (€10.6bn) a year earlier, while automobile exports to the US fell to $4.68 bn (€4bn), down from $6.2 bn (€5.7 bn) in July 2024. The downward trajectory in the EU’s exports is expected to continue. The US imported goods worth some $53.7 billion (147.1 bn Euro) in July 2025, down 10% from July 2024.

Besides tariffs, the surge in the euro’s value from $1.02 early 2025 to $1.18 in September against the dollar has added to the price hike of European products shipped to the US.

The Munich-based Ifo Institute for Economic Research stated in its latest study that German car exports to the US declined by 22% and machinery by as much as 30%. Ifo estimated that the EU-US trade deal would cut Germany’s GDP by 0.13%. “For an economy

(like Germany’s) which has currently posted little (growth), the effects will be significant,” said Lisandra Flach, one of the authors of the study and an economics professor. Experts suggest that Germany should forge free trade agreements with seven major emerging economies and regions, such as India, Indonesia, Malaysia, Thailand, the UAE, and the Mercosur group (Argentina, Bolivia, Brazil, Paraguay, and Uruguay).