President Trump says he is outraged by the fact that the United States imports more goods than sends the rest of the world. However, it rarely mentions that the tables are turned.
Services – which include finance, travel, engineering and medical industry and others – make up most of the US economy. Last year, the exports of these services brought more than $ 1 trillion to the United States.
However, this dominance also gives other countries some influence in negotiations – including the ability to store some pain on the US economy because it seeks retaliation against Mr. Trump’s tariffs on goods.
For example, the European Union could use tools designed to limit the services coming to the block as Cudgel.
“The real lever effect that Europeans have is on the side of the service,” said Mujtaba Rahman, CEO of Europe in the Eurasia Group, a political research company. “It will escalate it before it de-eskal.”
The United States is the largest exporter of services in the world and a large share of these services, from financial services to cloud computing, is provided digitally. Last year, the country has carried out nearly $ 300 billion.
For example, every time a European tourist stays in an American hotel, spending money is counted in the export basket. And every time someone in Canada or Japan or Mexico pays to listen to music or watch movies and television programs in the United States, add to the US surplus in the service store.
Many countries on which the United States focus on tariffs operates services with the United States, including Canada, China, Japan, Mexico and most of Europe, according to the US census.
“The EU is now equipped with political tools for expanding a number of reprisal measures against US tariffs to target US services,” wrote Filippo Taddei, CEO of Global Investment Research at Goldman Sachs, in a research report on possible European responses.
Probably the most extreme option is known as COERCion device. The tool, which was first designed in 2021, is largely not tested, but allows the European Union to hit a business partner with a “wide range of countermeasures”.
Such measures could include tariffs, restrictions on trade in services and limits in the field of aspects of intellectual property rights related to trade. This could affect American technology giants like Google. Several European diplomats said that the use of the tool is a clear possibility if the trade war escalated.
Although possible restrictions on services would be a new reaction of the trade wars, Brussels has the history of the penalty of the American technology industry for other reasons. For more than ten years, the European Union has left Silicon Valley for contradictory business practices, weak personal data protection and content moderation principles.
Aggressive supervision in Europe has led to remarkable products change, because the European Union, which is home to about 450 million people, is the main market. Google has changed the way it displays search results, Apple improved its app store, and META has edited Instagram and Facebook for EU rules.
Focusing on the technology industry would intensify disputes with Trump administration over European technological regulation. Before with Standa, higher officials, including Vice President JD, criticized the European Union for what they consider to be excessive regulation of American technology companies.
As soon as the European Union was expected to announce new fines against Apple and Meta for violating the Act on Digital Markets, the law approved in 2022 intended to facilitate smaller companies to compete against technical giants. Meta and X are investigated according to another new law called the Digital Services Act that requires companies to do more to make the shelves of their platforms for illegal content.
On the other hand, Britain can use its rules before importing services as carrots instead of a wand.
Throughout weeks, British officials tried to assure the public that it was in a strong position to negotiate with Trump’s administration to avoid tariffs, repeatedly pointing to a relatively balanced business of goods between the two countries. (Britain has an excess in terms of services.)
One of the painful points for Trump’s administration officials, however, was the digital service tax in British British tax, which is said to be unjustly damaging US technology giants. The tax was introduced in 2020 as a 2 % collection of search engines, social media and online markets. This fiscal year is expected to increase the equivalent of more than $ 1 billion for the British cash register.
British officials said the changes in this are part of the negotiations with Trump’s administration. Last month Rachel Reeves, Chancellor of the Treasury, said, “We must have the right balance.”
According to Chatham House scientists, a research institute, maintaining good relations with both regulations, Britain tried to stand in the “zone of Goldilocks”.
If the abolition of digital services brings to the United Kingdom “Agreement on Darling, which avoids the worst of the American tariffs, it may prove to be a masterstroke,” wrote scientists Alex Krasodomski and Osulivan. “But that’s very uncertain – the priority of the President’s tariffs was in constant flow.”
It was more likely that Britain would eventually have to choose closer loyalty to the US or the European Union, they added.
