As Washington renews tariff threats, Europe is weighing retaliation. Hitting US services would hurt the US the most, but it comes with high risks.
Since trade tensions with the US kicked into high gear last year, the EU has consistently shied away from targeting American services, despite the sizeable US trade surplus in those sectors.
As EU leaders prepare to meet on Thursday night to discuss their response to President Donald Trump’s tariff threats over Greenland, the question is once again on the table: why are services off-limits?
Officials say the countermeasures package prepared last year, which focused on goods, is already viewed as the first line of response should US threats materialise. Targeting services, by contrast, is seen as a step that could trigger a sharper escalation.
That caution comes despite the fact that the US posted a €148.0 billion trade surplus in services with the EU in 2024, meaning retaliation against sectors such as financial services or big tech would likely be far more painful for Washington, which depends heavily on access to the EU’s 450 million consumers.
During a meeting of EU ambassadors on Sunday, Euronews learned that France, Germany and Spain raised the option of deploying the EU’s anti-coercion instrument – a never-before-used tool designed to counter economic pressure from third countries.
Considered a measure of last resort, it would allow the EU to restrict licences for US services or intellectual property rights.
A tax on digital advertising revenues was also floated last year by Commission President Ursula von der Leyen during the previous tariff spat. Such a move would hit tech groups such as Meta, Google and Facebook, which generate most of their income from digital advertising.
And yet, striking at services is seen as far riskier than targeting goods.
Europe’s dependence on US services
“Hitting services has a greater potential, but it is less common than hitting goods with tariffs, and could therefore be viewed as an escalation,” Varg Folkman, an expert at the European Policy Centre, told Euronews.
“Tech and financial companies are powerful and have Trump's ear. Hitting any one of them would be a drastic action and would make a lot of noise.”
European officials also fear a full-scale trade war that would ultimately push prices higher for EU consumers. Compounding the risk is Europe’s reliance on US firms, with few domestic alternatives available.
“If you shut out American cloud providers or banking services, there aren't necessarily EU options to step in and fill the vacuum left by them,” Folkman said.
Many core services used in the EU, including payment systems such as Visa and Mastercard, are US-based. So are most cloud providers, with Microsoft and Amazon Web Services dominant.
Beyond trade defence tools, Brussels still has competition policy and digital regulation at its disposal. Regulations such as the Digital Markets Act and the Digital Services Act allow the Commission to fine big tech firms for stifling competition or failing to tackle illegal content and disinformation.
“The EU could really stiffen up the rules,” Folkman added. “We know that the Commission is looking into X at the moment. It could push that investigation, go harder at it. Brussels could really try to enforce outstanding fines against US Tech giants.”
Still, with Trump having already lashed out at EU regulators over their enforcement of tech rules, the Commission has repeatedly insisted it is not singling out US firms, stressing that its approach is non-discriminatory and applies equally to companies from all countries.