"EU's Digital Tax is Discriminatory," US Suggests "Counter-Sanctions" Against European Companies—Service Trade Becomes a New Battleground

The US has explicitly warned EU companies over the "Digital Tax." The spark is the EU's regulatory tightening against US tech giants, accompanied by taxes and fines. What makes this move unusual is that the backlash is not only directed at EU regulatory authorities but also at prominent European service companies. Reuters

Previously, trade frictions tended to focus on "goods" like steel and automobiles. However, in the digital economy, services such as advertising, cloud, software, travel booking, and consulting are the real value drivers. If the US decides to impose "fees on services" or "market access restrictions," the battleground could expand rapidly.

1) What Happened—USTR Publicly Declares "Retaliation Card"

On December 16 (local time), the US Trade Representative (USTR) criticized on social media that the EU and some member states continue "discriminatory and harassing" lawsuits, taxes, fines, and directives against US service companies, warning that if the situation does not change, it will counter with "every tool at its disposal." The post further suggested that, if necessary, the US could impose "fees or restrictions on foreign services" under US law. X (formerly Twitter)

What caught attention this time was the "naming." The USTR claimed that "EU service companies can freely operate in the US market, while US companies are being targeted in the EU," listing companies like Accenture, DHL, Siemens, Spotify, and Mistral. Other companies mentioned include Amadeus, Capgemini, Publicis, and SAP.

2) It's Not Just "Digital Tax"—A Three-Way Struggle of Regulation, Fines, and Politics

Following the reports, this warning is discussed not as a standalone "Digital Tax" issue but in conjunction with the digital regulations (platform regulations) and sanctions that the EU has strengthened in recent years. A symbolic example is the fine imposed by EU authorities on Elon Musk's social media platform "X." The amount is about 120 million euros (some reports say about 140 million dollars), with transparency obligations under the Digital Services Act (DSA) being the focal point.

The EU side argues that "rules are applied fairly to all companies." Thomas Renier, a spokesperson for the European Commission quoted by Business Times, explained that EU rules are applied "equally and fairly," showing a stance to continue enforcement.

On the other hand, the US side sees a gap between "formal non-discrimination" and the "burden concentrated on US companies in practice." They view the accumulation of legal interpretations, operations, and sanctions as creating "substantial entry barriers."

3) Why Name European Companies—A Negotiation Tactic to Create "Collateral Damage"

In trade negotiations, if you want to move the "opposing government," the quickest way is to increase the number of "stakeholders in pain" within the opponent's country. This naming seems to aim at putting pressure not only on EU authorities but also on European industries by suggesting that "damage will occur if things continue as they are."

4) Reading the "Named List" by Industry—What is Likely to be Targeted?

Looking at the listed companies, they are not just "general EU companies," but services that US industries and consumers use regularly.

• Corporate IT & Consulting: Accenture/Capgemini/SAP

• Travel & Airline Booking Platforms: Amadeus

• Advertising: Publicis

• Logistics: DHL

• Consumer & Tech: Spotify/Mistral/Siemens

If "fees," "service provision restrictions," or "strict procurement requirements" are introduced, it could directly hit company revenues and contracts, potentially impacting the EU's political process (industry voices).

5) Is the Next Move "Trade Act Section 301"?—A "Classic Blade" Used in the Past

The point of interest is what exactly the USTR's "every tool" refers to. Multiple reports suggest that the US government is preparing an investigation under Section 301 of the Trade Act of 1974. The Section 301 investigation is known as a framework that could lead to remedial measures like additional tariffs if it determines that foreign measures are "unreasonable/discriminatory" and burdens US commerce.

In the past, Section 301 has been used concerning digital services taxes (DST). The US Congressional Research Service (CRS) documents the history of the French DST being subject to a Section 301 investigation in 2019, and subsequent investigations into DSTs from multiple countries.

Regarding the UK DST, the USTR even announced the procedure for imposing additional tariffs (25%) in the Federal Register (although it was temporarily suspended for negotiations at the time).

6) Where Did International "Digital Tax" Get Stuck?

Originally, the OECD-led "Two-Pillar" agreement was expected to be the "exit" to end the situation where countries independently introduce DSTs. The multilateral treaty (MLC) to implement Amount A, the core of Pillar One (reallocating part of the profits to market countries), is designed to "remove DSTs" upon introduction.

However, the longer the implementation of the agreement is delayed, the stronger the temptation for countries to revert to their own DSTs. It has been reported that the US instructed to resume investigations with an eye on retaliatory tariffs against countries imposing DSTs as early as February 2025. Reuters

Meanwhile, Canada has indicated a policy to withdraw DST by June 2025, creating a "precedent" for policy change with an eye on US relations.

7) Reactions on Social Media—"Follow the Law" vs. "Overregulation" vs. "Stop It"

This conflict has also polarized social media. Despite being a complex theme of "taxes and regulations between nations," emotions are easily ignited.

Pro-Europe: "Tax in the Market Where You Earn," "Big Tech Should Follow the Law"

In the European community on Reddit, posts like "Revenue should be taxed where it occurs" and "US Big Tech dominates the European market yet still complains?" stood out. There were also reactions mocking the US's threats with comments like "Oh no. Anyway…" Reddit

Pro-US: "EU Targets US Companies," "Regulations Stifle Innovation"

On the other hand, in the US, the strong wording of USTR's "every tool" was highlighted and spread by news accounts. There was a noticeable narrative viewing the sanctions and regulations concentrated on US companies as "unfair" and "anti-American."

Twist in the Startup World: "Big Tech" and "Little Tech" Have Different Interests Even in the Same US

Interestingly, even within the US, there is not a unified stance. According to Business Times, a policy official from Y Combinator criticized the current move as a "betrayal to Little Tech," arguing that the EU's Digital Markets Act (DMA) actually offers market opportunities to US startups. In other words, "protecting Big Tech" and "the competitive environment for startups" do not necessarily align.

8) If Retaliation Becomes a Reality: "Subtle Changes" in Everyday Life

The term "trade war" sounds dramatic, but the visible impact on everyday life might be rather subtle.

• Price Revisions for Subscriptions like Spotify (fees passed on)

• Increase in Contract Prices for Corporate Software (SAP, etc.) and Consulting (Accenture, etc.)

• Increase in Procedures and Fees for Travel Bookings (Amadeus, etc.)

• Rise in Customs and Delivery Costs for Logistics (DHL, etc.)

None of these are "newsworthy," but they have a broad and subtle impact. The growing "middle-class anxiety" on social media is summed up in the point, "Isn't the burden ultimately on the users?"

In Conclusion: Digital Has Become a "Sovereignty" Issue Before a "Tax" Issue

Digital taxation may seem like a tax issue, but in reality, it's a sovereignty issue of "which country controls the power of giant platforms and where value is captured." The EU is advancing "governance by rules," while the US pushes back with trade cards, labeling it as "discrimination."

This "naming" indicates the possibility that the issue may spread to the entire European service industry. The next focus is whether the USTR will truly step into institutional measures like a Section 301 investigation, and whether the EU can find a compromise while maintaining its stance of "fair and non-discriminatory application."