Over the weekend, Donald Trump made headlines again—this time by announcing new tariffs targeting European exports. For many, this signals the possible escalation of transatlantic trade tensions. While the focus is mostly on traditional industries like automotive or agriculture, Europe’s tech sector should be paying close attention too.

In a world where digital services drive growth and value creation, Europe must stop thinking about trade only in terms of physical goods. If we want long-term strategic independence, we need to get serious about the digital side of our trade relationship with the US.

Digital Trade: The hidden imbalance

Despite Europe’s trade surplus with the US in goods, there is another story unfolding in the digital realm. The US enjoys a large and growing surplus in digital services trade with the EU, which includes exports of cloud services, software, AI tools, and digital platforms. Estimates suggest this surplus exceeds €100 billion. These services are often dominated by tech giants, many of which have a significant footprint in Europe but contribute far less proportionally in taxes or job creation than European tech companies and SMEs.

This imbalance is rarely talked about, but it matters. It drains value out of Europe’s economy and puts our tech SMEs at a disadvantage.

Europe has the tools to enable fairer digital trade

The EU is not without options facing trade imbalances. One key new measure is the Anti-Coercion Instrument (ACI), a legal tool created to respond to unfair trade pressure from countries outside the EU.

While the ACI has so far been discussed mainly in the context of goods and raw materials, as France’s European Affairs Minister suggested, it could also target services, especially in the digital sector.

One such measure could be the introduction of a European digital levy on major foreign tech platforms. Although previous attempts to agree on a global solution at the OECD level have stalled, the current geopolitical context may justify stronger EU-level action. This would also align with broader goals of tech sovereignty and digital competitiveness.

Invest in Europe’s Technological Future: Use the next budget to boost innovation

Beyond these targeted measures, Europe also needs to invest in its own strengths. If the EU wants to close the digital gap and reduce strategic dependencies, it must back its tech SMEs with more than regulation. It must provide funding, scale, and long-term vision.

The Multiannual Financial Framework (MFF), the EU’s long-term budget plan, which runs in seven-year cycles, is currently under review, with a proposal expected tomorrow. Increasing the budget for digital innovation, AI development, cybersecurity, and SME support under instruments such as the European Competitiveness Fund would send a strong signal: Europe is serious about empowering its homegrown tech ecosystem.

Europe’s digital SMEs and innovators are agile, innovative, and deeply rooted in local economies. What they need is a more supportive environment to grow, especially as global tensions rise and trade conditions become less predictable. This should also include introducing ”Buy European” provisions in the revision of the Public Procurement Directives to ensure public demand supports EU-based digital providers. By combining strategic investment, fair trade instruments, and a stronger internal market preference, the EU can start to correct its digital trade imbalance and build lasting technological sovereignty.