The United States and the European Union have entered a new phase of trade disputes over an imbalance in services. Unlike traditional disputes over goods, this time the conflict concerns digital services provided by US tech giants.
The New York Times reports that the service sector is the largest part of the US economy, generating more than a trillion dollars annually. This provides the US with a significant bargaining advantage, although it also makes it vulnerable to possible sanctions.
The European Union, in turn, is ready to use political tools to restrict the access of American digital services to the bloc’s market. “The actual leverage of the Europeans is in the services sector,” said Mujtaba Rahman, CEO for Europe at Eurasia Group.
Despite the fact that the US dominates the digital services market, the EU has repeatedly fined US companies for violating antitrust laws and inadequate data protection. Google, Meta, Apple, and other Silicon Valley giants have received heavy fines.
According to the latest data from the European Commission, total trade in services between the US and the EU was worth €746 billion in 2023. The EU exported €319 billion worth of services, while importing €427 billion from the US. This created a deficit of €109 billion in favour of the US.
European diplomats warn that if the trade conflict escalates, new sanctions against US tech companies may be imposed. The “anti-coercion tool” adopted by the EU in 2021 could become a means of putting pressure on Washington.
