Xinhua Finance, Brussels, December 3rd. Recently, new frictions have emerged between the US and the EU over digital regulation. The US accuses the EU's regulations of being unfair to US tech companies and uses tariffs on steel and aluminum products as a bargaining chip to demand that the EU "relax" its regulations; the EU, in turn, criticizes the US's move as "extortion" and insists that digital regulations are related to sovereignty and cannot be challenged.

Analysts believe that the United States is trying to force the EU to yield by using tariffs as leverage in order to maintain its dominance in the global digital industry. The EU is caught between the dilemma of defending digital sovereignty and saving the steel and aluminum industries, with limited room for strategic autonomy.

The United States and Europe are "arguing" over digital regulation.

After the EU and the United States reached a trade agreement in July, economic and trade frictions between the two sides did not subside. In August, the United States imposed a 50% tariff on more than 400 steel and aluminum products from the EU, while loudly accusing the EU of increasingly stringent digital regulations on US tech companies.

Since the beginning of this year, the EU has launched a series of law enforcement actions against US technology companies based on the Digital Services Act and the Digital Markets Act. In September, the EU imposed an anti - trust fine of 2.95 billion euros on US - based Google on the grounds that its actions in the advertising - related fields were in violation of regulations, and required it to submit a rectification plan. In October, the European Commission preliminarily determined that the US - based Meta Platforms, Inc. failed to provide researchers with sufficient access to public data, and its subsidiaries Facebook and Instagram also violated relevant obligations. In November, the European Commission announced the launch of a new round of investigation procedures against Google, examining whether its search results are fair to the media industry, etc.

Recently, the European Commission has launched an assessment of American companies Amazon and Microsoft to determine if they are "gatekeepers" of cloud computing services. If they are recognized as "gatekeepers", the EU can conduct market investigations and impose sanctions for violations in accordance with the law. According to foreign media reports, the EU may also issue a massive fine of up to 6% of its global annual revenue to the American social media platform X before the end of 2025.

The United States has criticized on multiple occasions that the EU's regulatory measures are targeted at US companies. Google, Amazon and other companies have recently stated that they disagree with the EU's relevant rulings and will file appeals. At the end of August, US President Trump threatened on the "Truth Social" platform that he would impose "additional tariffs" on countries that implement digital taxes, digital regulations, and "harm or discriminate against US technology companies".

At the end of November, US Commerce Secretary Wilbur Ross linked digital regulation to steel and aluminum tariffs during a meeting with European Union trade officials. Ross said that the EU would have to adjust its regulatory rules for tech companies if it wanted the US to lower its tariffs on its steel and aluminum products.

US seeks digital hegemony; Europe emphasizes digital sovereignty.

Observers believe that the United States is trying to curb the expansion of EU digital regulation through tariff bargaining chips. Sandro Gozi, a member of the European Parliament, said that behind the US tariff threats lies the intention to control the European and even global digital industries. The United States does not want to abide by any EU rules. US tech companies talk about innovation all the time, but what they really want is a huge market that is "lucrative but lawless".

Ding Chun, director of the Center for European Studies at Fudan University, said that the U.S. linkage of digital regulation and steel and aluminum tariffs to exert pressure on the EU is essentially about "bargaining", attempting to prevent the EU from setting barriers for U.S. large tech companies through regulatory means, thereby maintaining its digital industry's competitive advantage in the global market.

According to foreign media reports, Lutnick promised that the United States would make a large investment in European data centers and artificial intelligence infrastructure if Brussels amended its digital regulatory regulations, potentially amounting to as much as $1 trillion. The digital information repository platform OREACO analyzed that this approach embodies a typical "carrot and stick" negotiation strategy, involving both the imposition of punitive tariffs and the promise of future economic benefits.

The EU believes that digital regulation applies to all countries equally and is a matter of sovereignty. A spokesperson for the European Commission, Thomas Reniel, said: "We have always been clear: Europe has its own legislative autonomy. We fully support our own digital legislation and are implementing it."

The European Commission's executive vice president,Theresa Rivera, has criticized the behavior of the Trump administration as "extortion," believing that digital regulation is a matter of sovereignty and should not be included in trade negotiations, and that European digital regulations are non-negotiable.

The European strategic autonomy space is being squeezed

The US interference in the EU's digital regulatory action with steel and aluminum tariffs has cast a new shadow over the next round of trade negotiations between the two sides, and the EU's strategic autonomy has been squeezed.

Steel and aluminum tariffs are of great economic importance to the EU, affecting a wide range of products, from car parts to construction materials, with annual exports to the US reaching billions of dollars. European steel producers, who were already facing many challenges, such as rising energy costs and the green transition, will be threatened with survival by the US tariffs.

Ding Chun pointed out that the United States is firmly holding on to the "soft spot" of traditional industries in the EU as a lever to pry open the relaxation of digital regulation, and the EU does not have an advantage in this trade game. The EU has tried to maintain a hard line on digital sovereignty against the US. French President Emmanuel Macron recently stated that he will strive to take action at the EU level to counter US pressure.

Industry players analyze that the United States linking tariffs with digital regulation has put the EU in a dilemma: if it concedes in digital regulation to exchange for tariff reduction, it may trigger political backlashes; if it insists on a hardline position, it may bear greater trade shocks, further deepening the transatlantic relations divide.

The CEO Publication magazine website analyzed that the US side's bargaining chips are increasing because the European side's demand for tariff reduction is more urgent than the US side's demand for regulatory relaxation. At the same time, the US has also launched a "cross-issue" negotiation model, which may embed digital regulatory conditions in any future trade consultations.

Ding Chun believes it is still too early to tell whether the EU will ultimately compromise on digital sovereignty. "Whether it is a security issue or economic and trade cooperation, the EU is inseparable from the United States. As a vision, the pursuit of strategic autonomy by Europe is reasonable, but the reality is that Europe's room for strategic autonomy is very limited."

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