Europe Signals ‘No Compromise’ on Trade, Prepares Counter-Tariffs on US Tech

The U.S.-initiated tariffs have been paused for three months and the negotiation posturing has begun. Brussels is bracing for a fresh escalation in the EU-US trade standoff after European Commission President Ursula von der Leyen indicated the bloc would not hesitate to retaliate if negotiations aimed at defusing tensions fail. In an interview with the Financial Times, von der Leyen said, “We are prepared to deploy our most powerful trade measures if we see no other way forward,” underscoring the EU’s readiness to impose levies on American digital companies should President Donald Trump’s tariffs on European imports remain in place.

Speaking against the backdrop of an increasingly fraught transatlantic relationship, von der Leyen’s comments highlight growing unease in European capitals about the economic toll of tit-for-tat tariffs and the potential for further escalation. While the Trump administration has long accused Europe of unfair trade practices, particularly in the automotive and agricultural sectors, the EU counters that Washington’s reliance on unilateral tariff hikes undermines international trade norms. In response, Brussels has sought to balance dialogue with defensive measures designed to protect its industries and maintain leverage at the negotiating table.

Von der Leyen’s willingness to target digital giants, many of which are headquartered in the U.S., reflects a broader European ambition to more tightly regulate the technology industry and ensure that foreign firms comply with EU standards. The Commission has already proposed several digital initiatives, including stricter oversight of online platforms and more robust privacy protections. Her remarks now raise the possibility that additional revenue measures, sometimes referred to as “digital taxes”, could be deployed as a bargaining chip if the current impasse over trade barriers persists.

Analysts note that a further rift between the EU and the U.S. could have significant repercussions for both economies. European businesses reliant on exporting to American markets have already faced economic headwinds, prompting EU officials to explore alternative trade partnerships. Yet the Commission remains hopeful that an accord can be reached, with von der Leyen emphasizing that meaningful dialogue remains the preferred path. By making clear the EU’s resolve to “protect its strategic interests,” however, she signaled that Europe will no longer shy away from tough countermeasures.

Whether Washington and Brussels can avert a deeper trade rupture remains to be seen. For now, von der Leyen’s bold statement — in which she vowed to “do whatever it takes to defend European industry” — suggests that diplomacy alone may not suffice.

The ongoing trade tensions between the U.S. and the EU mirror broader global concerns about the impact of tariffs on economies. Recent coverage of the issue and research by PYMNTS highlights the significant effects tariffs have had on both consumers and businesses. For consumers, tariffs have led to increased prices across various sectors, including groceries, clothing and electronics, with lower-income households facing particularly significant financial burdens.

As PYMNTS CEO Karen Webster has written recently, for businesses, especially small and medium-sized enterprises (SMBs), tariffs have resulted in higher costs, supply chain disruptions and uncertainty, which can lead to missed business opportunities and reduced investment. Additionally, PYMNTS Intelligence has found that uncertainty surrounding tariffs acts as an invisible tax, affecting business decisions and consumer spending habits, potentially leading to reduced economic growth and increased financial strain.