Efforts to finalize a transatlantic trade agreement between the European Union and the United States have hit a stumbling block, with disagreements over digital regulation delaying a joint statement initially expected in July.
According to reports, the hold-up stems from differences on how “non-tariff barriers” are defined. U.S. officials have argued that the EU’s Digital Services Act (DSA) falls into this category, while Brussels has insisted that its digital framework is non-negotiable.
The Context: A Narrowly Avoided Trade War
The original deal, announced last month by European Commission President Ursula von der Leyen and U.S. President Donald Trump, introduced a 15% tariff on most EU exports to the United States—half the rate initially threatened by Washington. The compromise helped avert a wider trade conflict between two of the world’s largest trading partners, who collectively account for nearly one-third of global commerce.
While the agreement reduced immediate tensions, both sides had anticipated releasing a formal joint statement to set out the framework for future cooperation. That statement has yet to materialize, with digital policy now at the center of contention.
Digital Services Act: A Point of Divergence
The EU’s DSA, which came into force in 2023, is one of the most ambitious regulatory frameworks governing online platforms. It requires major technology companies to take stronger action against illegal and harmful content, ranging from hate speech to child exploitation material, while also mandating greater transparency in platform operations.
Washington has voiced concerns that the law imposes undue costs on U.S.-based tech firms and restricts free speech, positioning the DSA as a barrier to fair competition. For Brussels, however, the DSA is a cornerstone policy and not open to dilution in trade talks.
Tariff Reductions in Limbo
Another unresolved issue concerns U.S. tariffs on European automobiles. The European Commission had expected President Trump to issue an executive order by mid-August lowering the U.S. tariff on EU car imports from 27.5% to 15%. However, U.S. officials have indicated that such a move is unlikely until a joint statement is agreed.
Strategic Implications
The impasse highlights the complexity of aligning two major economies with divergent approaches to digital governance. For the EU, protecting its digital regulatory agenda is about safeguarding consumer rights, online safety, and market fairness. For the U.S., the priority lies in ensuring that American technology companies retain competitive flexibility without excessive regulatory burdens.
The delay in formalizing the trade deal underscores how digital policy has become as strategically significant as tariffs in shaping the future of global trade. The outcome of these negotiations could set an important precedent for how digital regulation interacts with international commerce in the years ahead.
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IMAGE: AFP
