In a rare moment of Congressional consensus, a Democrat backed up the Republican majority on the House Judiciary Committee. The unifying topic? Overregulation by the European Union. A few hours later, the Office of the United States Trade Representative (USTR) threatened retaliation against the EU and any countries “that pursue an EU-style strategy” that might impact US service providers.  

Just one day before, the US paused its “tech prosperity deal” with the UK, citing a lack of progress on trade barriers — including digital taxes. UK officials tried to brush off the pause as a negotiation tactic. 

The trend continues. Many in Washington feel the EU is unfairly and deliberately targeting large US tech firms. Washington does not like it when any other jurisdiction follows suit. Now, the US government has threatened to take direct action in defense of US tech firms.   

The European Commission has responded that the rules apply fairly to “all companies that operate in the EU” and that the Commission is delivering “a safe, fair and level playing field in the EU, in line with the expectations of our citizens.”  

The House Judiciary Committee hearing was labeled “Anti-American Antitrust: How Foreign Governments Target US Businesses” — a nod to the “Brussels Effect,” the spread of EU regulations to jurisdictions all over the world. South Korea’s version of the EU Digital Markets Act (DMA), a competition law purportedly designed to promote innovation, is the latest example.  

Unlike most competition or antitrust law, which is applied after a breach has occurred, the DMA is applied in advance, with future impact in mind — and it applies to certain companies. 

The DMA itself does not name specific firms, but it does allow the European Commission to decide which firms the law applies to. The Commission’s list includes mostly American giants like Apple, Google, Meta, and Amazon. The impacted tech firms and many US lawmakers object to this approach.  

Representative Lou Correa, a Democrat, expressed his dismay at the EU placing a “target on the backs” of US firms, many of which are based in his home state of California. The Republican committee members shared similar views — but the hearing was no group hug. The majority of the Democrats used their time to attack President Trump’s policies on multiple issues, many unrelated to tech policy. 

The spread of EU rules is also exercising minds in Washington. European rules are often bundled together in discussion. The DMA is part of a package of EU legislation on technology, which also includes the Digital Services Act, the AI Act, and the Cloud Act. Digital service taxes, which are set at the national level and not by the EU, are woven into the same narrative in Washington. 

The USTR issued a dramatic message condemning the full range of taxes, fines, lawsuits, and directives as “discriminatory and harassing” and drawing a comparison with a list of large EU service providers that have “enjoyed expansive market access” in the US. USTR’s threat to the EU, and everyone else, was explicit: 

“If the EU and EU Member States insist on continuing to restrict, limit, and deter the competitiveness of U.S. service providers through discriminatory means, the United States will have no choice but to begin using every tool at its disposal to counter these unreasonable measures. Should responsive measures be necessary, U.S. law permits the assessment of fees or restrictions on foreign services, among other actions. The United States will take a similar approach to other countries that pursue an EU-style strategy in this area.” 

If the USTR follows through on the threat, it will be a serious escalation. A Section 301 investigation seems like a likely first step. 

On trade issues, the European Commission claims it is already playing ball by “implementing the commitments in the EU-U.S. Joint Statement” and continuing to engage with Washington.  

There is broad acceptance in Brussels that regulation is not helping innovation, but European leaders walk a tightrope between their need to maintain relations with the US and not being seen as bowing to outside pressure on their own laws. In private, Commission and member state officials see the overt attacks on EU rules from Washington as more likely to hinder than help the ongoing efforts to reduce the regulatory burden within Europe. Instead, the Commission continues to issue fines and investigate US tech firms, and Members of the European Parliament call for further crackdowns. 

In the short term, the EU seems likely to dig its heels in. Other countries that are considering following the EU’s lead on tech rules will read the USTR’s message and perhaps think twice. 

Despite the tensions, a flicker of solidarity was visible in Washington. As the Judicial Committee sat in one room on Capitol Hill, the House Foreign Affairs Committee sat in another, discussing “Hybrid Warfare in Europe Against US Interests: Moscow and Beijing’s Playbook.” The consensus view from committee members and contributors alike was that transatlantic cooperation was essential for the US to defeat its rivals. 

But most signs point to continued transatlantic strife surrounding tech policy in 2026. If the drift continues, then the only winner will be China. Something has to give. And in the coming weeks, the USTR may seek to make that happen. 

Ronan Murphy is Director of the Tech Policy program at the Center for European Policy Analysis. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions expressed on Bandwidth are those of the author alone and may not represent those of the institutions they represent or the Center for European Policy Analysis. CEPA maintains a strict intellectual independence policy across all its projects and publications.

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