Dem
47
GOP
53
In March, Donald Trump threatened Europe: Buy more American gas or I'll hit you with crippling tariffs. Europe was happy to talk about buying more gas, but then Trump hit it with more tariffs, anyway. But in truth, the European Union has long expected the tariffs announced yesterday and is prepared to fight back. It is not going to roll over and play dead. And it may stop playing small ball, like last time. During Trump v1.0, the E.U. put tariffs on specific products, like Kentucky bourbon and Harley Davidson motorcycles, so as to cause pain in specific states, and thus to get the attention of specific senators. The Europeans also matched Donald Trump's tariffs closely. If he put a tariff of X% on some metal, they did, too. All of this was symbolic and didn't cause much actual pain.
Now European Commission president Ursula von der Leyen is thinking of doing things that will cause real pain to some U.S. companies that have actual clout and which will not be embarrassed to let Trump know about it. The E.U. runs a trade surplus in physical goods, like cars, but runs a deficit in services, like Internet services. It is thinking of hitting big banks, like J.P. Morgan and Bank of America and Internet companies, like Google and ex-Twitter.
Exactly how that would work has not been publicized yet, but there are many ways if people start thinking creatively. It doesn't have to be tit-for-tat. For example, the Digital Services Act regulates and bans illegal content and disinformation. For example, if a Facebook user posts a blatant lie, that is not a crime in the U.S. It might be a crime—with a whopping associated fine—in Europe. That would force Facebook to either vet all content, which it probably couldn't do, or shut down in Europe. If a Google search turned up a site with Russian propaganda, that could result in Google getting hit with a big fine as well. Doing things like this would not require new legislation, merely rigorously enforcing existing legislation.
Another area the E.U. could go after is banking. While U.S. banks generally don't have substantive (or any) retail operations in Europe, they are active in areas like corporate banking. There could be new fees and taxes on their operations in Europe.
If things really escalate, the E.U. has a very general regulation known as the Anti-Coercion Instrument that allows it to fight back on economic coercion, like, say, unreasonable tariffs. It would allow the E.U. to simply ban selected social media companies, prevent them from investing in Europe, or restrict their intellectual property rights in Europe. These could be extremely painful for the targeted companies, and the CEOs of said companies would most definitely make sure Trump knew about it. (V)