Trump’s Tariffs Are About Power, Not Trade
Washington sees EU digital taxes and regulation as a challenge to American technological power. A commentary by Lorenzo Bini Smaghi
The data alone should be enough to show that the tariffs imposed by the Trump administration are not aimed at reducing the US trade deficit or increasing employment in manufacturing. Last year, the trade deficit in goods remained broadly unchanged from 2024, at around $1.2tn. Manufacturing employment continued to fall, by 108,000 jobs, as it had the previous year.
One could conclude that the tariffs failed to achieve their objective. Or that the objective was different.
The first aim was to raise fiscal revenues, which did indeed increase by about $200bn. The second was geopolitical: to put pressure on other countries so that they align with US interests, or at least refrain from opposing them. This was the case, for example, with tariffs against India, intended to push it to stop buying oil from Russia, or those against Brazil, aimed at making it stop “persecuting” former president Jair Bolsonaro.
It is from this perspective that we should interpret the US president’s threat, made a few days ago, to impose additional tariffs of 100 per cent on countries that have introduced, or intend to introduce, a tax on digital services sold in Europe by American companies.
Some countries, including Italy, France and Spain, as well as the United Kingdom, already impose a digital tax on revenues earned domestically by technology multinationals.
The US president’s announcement, which came a few days after the European Parliament ratified the trade agreement reached last summer between the United States and the European Union, marks the beginning of a new phase of tension in transatlantic relations.
The American objective is clear. Europe must remove any fiscal or regulatory measure that limits large technology companies’ access to the European market.
This is consistent with the US national security strategy published in November 2025, in which the administration commits itself to supporting “the most advanced, innovative, and profitable technology sector in the world, which forms the foundation of our economy, gives our armed forces a qualitative advantage, and strengthens our global influence.”
This strategy is fully supported by the US technology companies themselves, which are seeking to reinforce their dominant position in European markets through close political and financial ties with the administration.
In this design, it is now clear, Europe is an essential outlet for US companies, which need to expand their customer base in order to face Chinese competitors. Any attempt to reduce, contain or tax access to the European market is treated as a hostile act against the United States, and therefore as justification for threats or retaliation.
There are several lessons Europe should draw from this.
The first is that Europe should not delude itself into thinking that this attitude will disappear with a possible change of administration.
The tone, methods or approach may change, but technological competition with China has by now become the only bipartisan objective in the United States, uniting Republicans and Democrats.
The policies implemented by previous US presidents, not least Joe Biden’s Inflation Reduction Act, show that hostility to European regulation and pressure to reduce its impact on US companies go back many years.
The second lesson for Europe is that achieving strategic autonomy, particularly in technology, will not be easy. It will inevitably clash with the American determination, shared by political and business leaders, to preserve US dominance, including in the European market.
This confrontation is independent of the regulatory framework in place in Europe. It will not diminish if Europe becomes more integrated and more open. It is an illusion to think that reducing internal barriers within Europe will be enough to allow European companies to grow. The first beneficiaries of greater integration in the European market will be large American companies, which already enjoy a dominant position, especially in technology and finance.
As the experience of the aerospace sector shows, one of the few industries in which Europe competes on equal terms with the United States, particularly through Airbus, the emergence of global European companies capable of using the European market to challenge American dominance requires strong political commitment from member states, or at least from some of them.
Reducing internal barriers is not enough. There must also be a shared political commitment among member states to secure European strategic autonomy.
A previous version of this article was published in the Italian daily Il Foglio
IEP Bocconi does not express opinions of its own. The opinions expressed in this publication are those of the authors. Any errors or omissions are the responsibility of the authors.
