As the European Union gears up to tackle Trump’s 25% tariff on aluminum and steel, a recent report from Goldman Sachs suggests one strategy: pressuring US tech companies. This approach could serve as a bargaining chip in trade negotiations.
The EU’s Digital Markets Act has sparked several investigations into major US tech firms, which experts believe could be leveraged to secure better trade terms. Meanwhile, the EU is also aware of its heavy dependence on American technology, pushing to develop its own AI capabilities similar to Trump’s Project Stargate.
Former Google CEO Eric Schmidt shared his thoughts with the BBC, stressing the need for government oversight on AI development. He cautioned, however, that too much regulation could hinder innovation. Schmidt also pointed to US semiconductor export controls as a tactic to limit adversaries’ access to technology necessary for advanced AI systems.
Amid the US’s ongoing trade disputes, European policymakers are anxious about potential US actions that might impede the UK and Europe’s aspirations to create independent cloud and AI systems. They’re left wondering: could the EU retaliate with tariffs on US tech?
Carsten Brzeski and Inga Fechner from ING recently penned an article about the trade war, highlighting that surplus countries, like the US, have more to lose in such conflicts. They suggest Europe might be better off strengthening its domestic economy. They call for reducing reliance on US technology by boosting local defense industries and fostering deregulation in the tech sector.
In January, the European Commission unveiled the Competitiveness Compass, laying out a plan for Europe’s tech future. This strategy envisions Europe as a hub for innovation and climate-neutral tech. It draws on insights from Mario Draghi’s report, aiming to revive the EU’s innovation landscape by nurturing startups and enhancing industrial leadership in high-growth sectors.
The plan includes the establishment of AI gigafactories and initiatives to drive the development and adoption of AI across various industries. Furthermore, the EU intends to simplify regulations, encompassing corporate, insolvency, labor, and tax laws, to facilitate innovation and investment across its Single Market.
Recently, European Commission president Ursula von der Leyen announced the InvestAI initiative, aiming to gather €200 billion for AI investments. This includes a new €20 billion fund designated for AI gigafactories. She likened this public-private partnership to “CERN for AI,” positioning it as a breeding ground for scientists and businesses of all sizes to produce advanced AI models and establish Europe as a leader in the field.
InvestAI will help set up AI gigafactories throughout the EU, each equipped with around 100,000 cutting-edge AI chips. There may be some confusion regarding what “cutting-edge” entails, but earlier generations of AI hardware have proven to be cost-effective, with firms like DeepSeek showing that comparable results can still be achieved without the latest technology, even against US companies such as OpenAI.