Technology regulation and value-added tax cannot be discussed! The EU warns the United States: If no agreement is reached in 90 days, taxes may be imposed on American technology companies

The European Union's latest warning states that if negotiations fail within 90 days, tariffs will be imposed on U.S. service trade, particularly targeting digital advertising revenues of tech giants like Meta, Google, and Facebook. Regarding tariff negotiations with Trump, the EU has also set clear red lines, stating that tech regulation and value-added tax are off-limits.

According to media reports, on April 10, European Commission President Ursula von der Leyen stated that the EU will seek to reach a "fully balanced" trade agreement with Washington during the 90-day suspension of "reciprocal tariffs" set by Trump. However, she also warned:

If negotiations fail, the EU is prepared to expand the transatlantic trade war from goods to services. We have a wide range of countermeasures we can take, which may include the first use of the anti-coercion tool targeting U.S. service exports.

Von der Leyen explicitly pointed out that tariffs on U.S. service trade may include "taxes on advertising revenues from digital services," which will directly impact U.S. tech giants like Meta, Google, and Facebook.

According to Shanghai Securities Journal, Trump postponed the originally planned 20% tariffs on EU goods for 90 days on April 9 and adjusted the rate to 10%. On April 10, the EU announced that the retaliatory measures against U.S. steel and aluminum tariffs would be delayed for 90 days.

Service Trade Becomes the Focus of Retaliation

If negotiations fail, the EU will automatically restart the planned retaliatory measures against U.S. steel and aluminum tariffs.

Additionally, von der Leyen stated that further countermeasures against Trump's "reciprocal tariffs" may target the significant service trade surplus between the U.S. and the EU. Trump only counts goods in trade data, excluding services exported by the U.S. to other regions of the world.

"Companies providing services perform well in the EU market, and 80% of services come from the U.S. So we hope to reach a solution that is most beneficial for everyone through negotiations," she said.

Negotiation Red Lines Have Been Drawn: Tech Regulation and Value-Added Tax

Although von der Leyen publicly proposed a zero-tariff agreement on industrial goods, there has been little progress in Washington, and U.S. officials complain about so-called EU non-tariff trade barriers, such as value-added tax and product standards.

She expressed willingness to discuss adjusting EU and U.S. standards but believes this may yield only limited results. Von der Leyen stated:

"I think it is absolutely worth studying where standards and regulations can be unified to facilitate trade, so I am open to that. But we should not expect too much, as differences in standards often stem from different lifestyles and cultures." Ursula von der Leyen ruled out the possibility of revisiting the EU's 'untouchable' regulations on digital content and market power, while Trump officials believe these regulations are essentially a tax on large American tech companies.

In addition, the EU will not negotiate on value-added tax, as she stated this is equivalent to the sales tax in the U.S.: "These are not part of the negotiation package because they are determined by our sovereignty."