American technology leadership is central to our national power. Our nation’s wealth, prosperity, and security are due, in large part, to our private tech sector’s ability to consistently innovate at the cutting edge and deliver breakthrough advancements that benefit the world. For the first time ever, investments in AI capex now contribute more to American growth than consumer spending.
But that leadership is under threat by a wave of foreign digital regulations and discriminatory regulatory bodies. Our foreign partners must agree to remove these digital barriers in the ongoing trade discussions, or they risk facing a series of more aggressive U.S. trade investigations.
Around the world, we’re seeing countries, including close U.S. allies, challenging U.S. tech leadership, not by delivering innovative breakthroughs of their own, but by kneecapping and extracting revenue from American firms. Most prominent is the European Union’s Digital Markets Act, which specifically targets U.S. companies with disproportionate fines and barriers to deploying products that European and Chinese rivals are free to offer. The EU is exporting this regulatory model to our closest allies, like Japan–which just entered into a cooperation agreement with the EU to implement their ex-ante Smartphone Act targeted at just two U.S companies, and South Korea-which is pursuing their so-called Online Platform Monopoly Act (OPMA) – a heavy-handed, bureaucratic overreach that revives the worst ideas from Europe’s failed Digital Markets Act.
The OPMA targets U.S. tech leaders under the guise of “fairness,” while giving Chinese state-backed firms like Alibaba, Bytedance and TikTok a free pass. It’s an unacceptable digital double standard. And the OPMA isn’t the only threat. The “Intermediated Transaction Act” being prioritized by the South Korean Lee Jae Myung administration would enshrine forced collective bargaining between platforms and sellers, along with price caps on transaction fees – the kind of anti-market interventionism we would expect from socialist economies, not one of America’s most important democratic allies. This is part of a broader pattern. For years, the Korea Fair Trade Commission (KFTC) has wielded its enforcement authority in ways that systematically disadvantage American companies. This isn’t isolated. It’s structural.
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Beyond DMA-style regulations, many of the same countries look to our leading companies for significant revenue to support a broad range of causes. First, digital services taxes, or DSTs, are discriminatory taxes placed on a subset of digital services. Because they are applied to a few U.S. companies, including the largest U.S. taxpayers, the administration and Congress have worked hard to stop their proliferation. Recently, Canada pulled back such a tax after direct intervention from the president. This episode illustrated that nations pursuing harmful digital laws and DSTs should expect swift and decisive retaliation from the U.S., an important lesson that our partners around the world must heed.
The broader international landscape reinforces the need for caution. The European Union has drawn Trump’s scrutiny for its own tech regulations, and its recent decision to shelve a proposed digital tax in the next EU budget, following pressure from the U.S., suggests a newfound recognition that such measures risk escalating trade tensions.
Unfortunately, the EU continues to pursue economically destructive regulations like the DMA, and other nations appear keen to repeat the same mistakes. Earlier this year, Poland’s Deputy Prime Minister Krzysztof Gawkowski defiantly vowed to press forward with a digital tax, arguing that it would bolster their own tech firms. But this argument ignores the broader implications for relations between Washington and Warsaw. Gawkowski’s claim that 35 other countries, including France, the UK, and, at that time, Canada, have adopted similar taxes only underscores the growing tension between nations seeking to siphon revenue from U.S. tech giants and the U.S. itself, which views these measures as discriminatory. The Trump administration has made it clear: digital taxes are a red line, and economic extortion is incompatible with stable, productive trade relationships.
The Trump administration rightly views these policies as economic extortion that target America’s wealth and competitive advantages in technological innovation. The White House recently called out barriers for digital trade, such as network fees, as areas the EU needs to address as part of the trade deal with the U.S. Secretary Lutnick also emphasized that DMA, DSA, and DSTs need to be addressed as part of the trade deal.
Digital taxes and regulations must indeed be a central topic in ongoing trade talks. Nations must recognize that targeting U.S. tech firms with discriminatory taxes and regulations invites retaliation and undermines the spirit of fair trade. Those like Poland and Korea considering implementing new DSTs and DMA-style rules should reconsider their plans before they jeopardize economic and diplomatic ties with the U.S. The global economy thrives on innovation, and digital issues must be addressed collaboratively.
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Alexander B. Gray served as Deputy Assistant to the President and Chief of Staff of the White House National Security Council from 2019 to 2021. Gray is CEO of American Global Strategies LLC, whose clients include technology firms.
Editor's Note: President Trump is leading America into the "Golden Age" as Democrats try desperately to stop it.
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