2025-04-10T20:00:39.000Z

---

The European Union is preparing to implement its most robust trade measures to date and may levy taxes on US digital companies if negotiations with President Donald Trump do not yield favorable results in the ongoing tariff war between Europe and the United States.

During an exclusive interview with the Financial Times, European Commission President Ursula von der Leyen emphasized the EU's commitment to achieving a 'completely balanced' agreement with Washington in light of a temporary 90-day pause in the application of additional tariffs announced by Trump. However, she also expressed readiness to escalate the transatlantic trade conflict, particularly in the services sector, should discussions falter. This escalation could involve taxing digital advertising revenues, impacting major tech companies like Meta, Google, and Facebook.

Von der Leyen stated, 'We are developing retaliatory measures.' She explained that these countermeasures could mark the first activation of the EUs anti-coercion instrument, which empowers the bloc to impose tariffs on services exports. 'Theres a wide range of countermeasures... in case the negotiations are not satisfactory.'

The proposed levies would be applied uniformly across the EU single market, differentiating them from digital sales taxes that individual member states impose. This approach is aimed at creating a level playing field amidst the complex international trade landscape.

Reflecting on the impact of Trump's trade policies, von der Leyen described the current situation as a 'complete inflection point in global trade,' asserting that, 'Its a turning point with the United States without any question.' She warned that the ongoing trade war has left all parties involved with significant losses, stating, 'There are no winners in this, only losers.' This turmoil has already been reflected in fluctuations in stock and bond markets, with von der Leyen stating, 'Today we see the cost of chaos... the costs of the uncertainty that we are experiencing today will be heavy.'

In a strategic move, the European Commission on Thursday temporarily suspended its planned retaliation against US tariffs on steel and aluminum, which were implemented last month and aimed at approximately 21 billion worth of US imports, including poultry, orange juice, and luxury yachts. Von der Leyen explained that the Commission had previously attempted to open negotiations with the US but received a directive to pause until Trumps announcement on April 2, which imposed a reciprocal 20 percent tariff on EU goods.

Although von der Leyen has proposed a zero-for-zero tariff arrangement for industrial goods, her overtures have met with limited response in Washington, where officials have raised concerns regarding alleged non-tariff trade barriers imposed by the EU, such as value-added taxes (VAT) and differing product standards. While she expressed openness to discussing the alignment of norms and standards to facilitate trade, von der Leyen cautioned against raising expectations too high due to inherent cultural differences that shape regulatory frameworks.

Significantly, von der Leyen ruled out revisiting the EUs stringent regulations concerning digital content and market powerissues that US officials view as de facto taxes on American technology firms. Additionally, she affirmed that negotiations would not extend to VAT, likening it to the US sales tax: 'These are not in the packages of negotiation because these are our sovereign decisions.'

Should negotiations fail to produce constructive outcomes, the EU plans to reactivate previously outlined retaliatory measures against US steel and aluminum tariffs. Furthermore, von der Leyen indicated that additional countermeasures targeting the US's considerable services surplus with the EU could be on the table. Unlike goods, which Trump highlights in his trade metrics, the services sector, from which 80 percent of exports to the EU originate, has remained unaddressed in his calculations.

As the conversation turned to the broader implications of a potential global trade war, von der Leyen emphasized that the EU would not tolerate the redirection of Chinese goods affected by US tariffs into European markets. She articulated that Brussels would take necessary precautions if a new monitoring system identified any increase in Chinese imports, reinforcing that this issue has been communicated to Chinese Prime Minister Li Qiang, who assured her that the risk was non-existent as it would stimulate domestic Chinese consumption.

Regardless of the outcome of ongoing discussions with the US, von der Leyen underscored that Trump's policies have fundamentally transformed global trade dynamics, prompting renewed dialogues between the EU and other countries, including Malaysia, Thailand, the Philippines, Indonesia, and the United Arab Emirates. 'There is a growing interest among many nations worldwide to collaborate with us in order to balance the system and foster free trade that prioritizes quality over tariffs,' she noted.

Both the US and the EU concur that the current framework of World Trade Organization (WTO) rules has failed to adequately level the playing field, particularly given Chinas subsidization of its manufacturing outputs, which has resulted in a flood of products into global markets. Consequently, the ongoing trade conflict has ignited discussions about the necessity of modernizing and reforming the WTO. 'But the emphasis must be on modernizing and reform; it cannot simply be a matter of preserving the status quo, which has proven to be fraught with challenges,' von der Leyen concluded. 'I mean, never waste a good crisis.'