Germany warns against tariff retaliation targeting Big Tech

Germany and other European countries have warned against Brussels hitting Big Tech should trade negotiations with the Trump administration fail in the coming months.

Earlier this month, US President Donald Trump said he would impose a “reciprocal tariff” of 20% on all imports from the EU, before reducing that to 10% over a 90-day period.

European Commission President Ursula von der Leyen told the Financial Times (FT) in an interview that Brussels was preparing retaliatory measures should those talks fail, including a possible tax on digital advertising revenues that would hit tech groups such as Amazon, Google and Facebook.

But Germany warned against such a move on Friday. “We need to be careful about digital companies because we don’t have a real alternative to what the American digital industry is offering,” said Jörg Kukies, Germany’s Finance Minister, referring to data centers for cloud services and artificial intelligence.

Speaking ahead of a meeting of European finance ministers in Warsaw to discuss the economic impact of trade tensions, Kukies noted that there were sectors where it was more difficult to substitute other services and goods from other parts of the world, just as there were products where it was easy.

Kukies said the bloc needed to prepare retaliatory measures, but argued they needed to be “nuanced and differentiated.”

The EU has suspended retaliatory tariffs on US goods such as yachts, motorcycles, clothing and foodstuffs for 90 days in an effort to allow talks to conclude.

Those tariffs were introduced in response to Trump’s 25% tariffs on European steel and aluminum, which are still in place.

France and several other EU member states support von der Leyen’s decision to prepare retaliatory options against US service companies, according to people with knowledge of the discussions between capitals, the FT reported. But countries with a large US tech presence, such as Ireland and Luxembourg, are more hesitant.

“We have said that everything is on the table. Among the measures we could take, there are measures concerning the digital industry. It is one of the elements on the table,” France’s Finance Minister Eric Lombard told the FT. He added that no measure had yet been decided and that the first objective was “to reach a deal with the Americans.”

France’s President Emmanuel Macron has also raised the possibility of hitting digital services, an area where the US has a large surplus with the EU, unlike trade in goods.

“It is clear that when we discuss the response to trade, we also need to look at trade in services, including digital services,” EU economy commissioner Valdis Dombrovskis said on Friday.

Poland’s Finance Minister Andrey Domanski, who chaired the talks in Warsaw, called on the bloc to “stand united” and said “We would prefer to first hear the official proposal of the Commission and then comment.”