French President Emmanuel Macron, along with European Union Trade Commissioner Maroš Šefčovič and other European parliamentarians, have recently traveled to the United States. Their primary goal is to navigate the Trump administration’s stance on Russia, but they also intend to address growing tensions related to trade and technology. Significant fault lines are emerging.
The United States has issued a memorandum threatening tariffs to address what it views as discriminatory European tech rules. These rules include digital taxes, fines, and other practices applied to American companies. In response, the EU has considered both retaliatory measures and potential adjustments to weaken its digital regulations.
These tensions were evident at the recent AI Action Summit in France, which I attended. Despite the summit’s final statement, ‘Inclusive and Sustainable AI for People and the Planet,’ garnering over 60 signatories, the US and the United Kingdom chose not to participate. They cited concerns that the statement would stifle innovation and lacked sufficient focus on security. In contrast, China readily joined, presenting itself as a cooperative global player.
Beneath the surface, however, China is pursuing its own path. It leads the world in AI-related patent filings and scientific research publications. Furthermore, China is rapidly deploying AI on a large scale, including robotized factories, advanced traffic systems, and facial recognition for mass surveillance. Europe’s strong AI principles contrast significantly with both Washington’s hands-off approach and Beijing’s state-driven efforts. The summit highlighted a clear truth: the global AI landscape is anything but level. The United States and China are the frontrunners, leveraging their distinct strengths in data, advanced semiconductors, and large-scale deployment.
Europe, advocating for a human-centered approach, faces the challenge of harmonizing its fragmented market and enforcing recently adopted digital regulations while lacking robust, world-leading companies of its own. Smaller nations in Africa, Southeast Asia, and Latin America are often overshadowed by the major power competition, left to consider whether they will be locked into unfavorable data deals without the proper digital infrastructure to compete.
The United States currently holds the leading position in AI. According to Stanford University’s AI Index, American companies receive eight times more private AI funding than their Chinese counterparts. This financial advantage is a key factor in their lead in advanced research, hardware development, and global brand recognition. US tech giants like Google, Amazon, Microsoft, and OpenAI are at the forefront of large language models, and US chipmaker Nvidia dominates the design of high-performance semiconductors essential for training these models.
The White House, eager to preserve this competitive edge, recently announced Project Stargate, a plan to invest $500 billion in the U.S. AI ecosystem. Yet, an unexpected contender reminded everyone earlier this year that money alone doesn’t guarantee success. DeepSeek, a Chinese firm, achieved impressive performance, comparable to ChatGPT, with fewer resources, underscoring that unlimited spending does not automatically lead to breakthroughs. Simultaneously, growing U.S. export controls on advanced semiconductors threaten U.S. companies reliant on global supply chains, while also pushing China to increase its own domestic chip manufacturing capabilities.
In this environment of increasing competition, Europe is accelerating its efforts to strengthen its digital autonomy. The European Commission has introduced InvestAI, a €200 billion initiative, which includes a €20 billion fund for AI gigafactories. These hubs aim to provide European researchers and companies, both large and small, with the resources needed to compete internationally. President Macron further supported this momentum with a €109 billion commitment to AI research.
The central question remains whether the race for AI and overall technological dominance will obscure the urgent need for regulatory safeguards. Europe’s experience illustrated that, despite widespread discussions about inclusive and sustainable AI, major powers are hesitant to impose meaningful limitations. As technology advances rapidly, key principles like democracy, privacy, and fairness risk being overlooked, which could leave smaller, less-resourced organizations and countries even further behind.
The recent U.S. memorandum specifically targets the EU’s digital rulebook, particularly the Digital Markets Act and the Digital Services Act, which regulate both market competition and social media. Several U.S. companies, including Elon Musk’s X, Meta, Google, and Apple, are facing investigations under these laws. Additionally, the Trump administration is looking into whether these laws ‘undermine freedom of speech.’ The US Trade Representative is scheduled to deliver a report on this matter by April 1.
For President Trump and his supporters, the EU’s laws are discriminatory. Jim Jordan, the head of the U.S. Congress Judiciary Committee, wrote to European Commission Executive Vice President Teresa Ribera to ‘express our concerns that the DMA may target American companies.’ In response, European officials insist they will apply the rules fairly, regardless of a company’s origin, whether American, European, or Chinese. European parliamentarians are traveling to Washington to reiterate this message. At the same time, Europe is working to streamline the complex compliance requirements of its new AI Act, partly to appease the U.S. and partly to improve the bloc’s competitiveness. Shortly after the Paris AI summit, the EU withdrew its plans for an expanded AI Liability Directive.
Whether these actions will successfully avert a major trade and tech war remains uncertain. If Brussels offers too many concessions, it could undermine its credibility as a leader in the global digital space. If it does not concede enough, the Trump administration may follow through with its threatened tariffs. Consequently, some in Europe are exploring how to ‘derisk’ not just from China, but also from the United States. ‘If Europe hopes to safeguard its own sovereignty and values, it must strategically decouple and dramatically lessen its dependence on companies that are either seeking confrontation or are otherwise vulnerable to being weaponized by Washington,’ argues Marietje Schaake, former European Parliament lawmaker, author and cyber expert at Stanford University. This new perspective, which views U.S. tech as potentially an ‘enemy,’ raises concerns for transatlantic cooperation.
Former U.S. President Donald Trump whose administration is attempting to defuse trade and tech tensions with the EU, and address growing concerns over the increasing dominance of artificial intelligence.
