The European Union is contemplating a robust response to Donald Trump's trade war, which could significantly impact major U.S. tech companies.
Image: Freepik
As the European Union looks at how best to respond to Donald Trump’s trade war, officials are considering further escalating things, taking them to a point where it could really hurt America’s Big Tech companies.
Sophie Primas, a spokesperson for the French government, said the EU is deciding on its response to Trump’s blanket tariffs, which would include not just tech goods, but tech services as well, an area where the U.S. enjoys a massive trade surplus. That would potentially target Google, Meta, Amazon, Apple, Microsoft, X, and others.
Apple is already under pressure as tariffs on imported goods will likely result in higher prices for the company’s products, such as the iPhone and iPad; but Microsoft’s stock has largely escaped the drubbing other tech companies have seen on Wall Street since Trump’s April 2 announcement. (Shares are down just 5% in the past five days compared to 10% for Nvidia and 18% for Apple.)
That’s because Microsoft’s chief products are software and services, such as cloud storage and Microsoft 365. Should the EU also place tariffs on services, it would cause more pain for tech companies, which are already sore after a series of tariff-inspired body blows.
Other examples of tech services would include Google’s ad and cloud network; Meta’s ad network as well as the Quest (and digital store); Apple’s Music, Arcade, and TV+ offerings; Amazon’s Web Services and Prime loyalty program; and X’s AI offering and planned financial services unit.
The EU, it’s important to note, has not imposed these reciprocal tariffs yet. On Monday, the European Commission said it had offered a “zero-for-zero” tariff proposal to Washington. Michal Baranowski, deputy economy minister of Poland, following a meeting of the Commission Monday, said EU officials did not want to be “trigger happy.” (Elon Musk has espoused a similar zero-tariff proposal in a video call to Italy’s right-wing, co-ruling League Party.)
The White House has, so far, shrugged off talk of “zero tariffs,” with Peter Navarro, Trump’s top trade advisor who is seen as the architect of the tariff plan, dismissing Musk as a “car assembler” who relies on parts from other countries.
“When it comes to tariffs and trade, we all understand in the White House—and the American people understand—that Elon is a car manufacturer, but he’s not a car manufacturer. He’s a car assembler,” Navarro said. “He’s a car person. That’s what he does, and he wants the cheap foreign parts.”
Should the Trump administration refuse to deal, which has not yet been discussed, EU officials said nothing was off the table, though there appear to be different schools of thought among members about whether placing a tariff on services would be wise.
Irish Foreign Minister Simon Harris said doing so would be “very much the nuclear option.”
The likelihood of putting tariffs on services is part of what the EU calls the anti-coercion instrument (ACI). Adopted in 2023, it was designed to defend the EU against a trade war with China, but now it’s being seen as a tool to battle Trump, if necessary. Some EU officials refer to it as the “bazooka.”
The ACI has wide-ranging potential powers. It can be used to limit American banks’ access to certain EU markets or it “could also increase tax and regulatory pressure on American digital platforms,” European Commission president Ursula von der Leyen said last week.
Talk that the EU could be considering a tariff on services from U.S tech companies comes as the market continues to show extreme volatility. On Monday, the Dow Jones Industrial Average saw trading range from 36,705 to 39,198—a nearly 2,500-point swing.
