The ongoing tit-for-tat escalation between the United States and China has garnered widespread attention, yet an equally significant shift is unfolding in the relationship between the U.S. and the European Union (EU).
In light of rising tensions with China, European leaders are increasingly expressing mistrust towards U.S. technology and are contemplating a strategy of ‘de-risking’ not only from China but also from the United States itself.
Concerns have intensified following the Trump administration’s harsh critiques of European tech regulations, coupled with the abrupt cessation of intelligence-sharing and military support for Ukraine.
This shift has instilled fears among European nations that the U.S. might enact a ‘kill switch’ to disable essential military technologies, such as the Lockheed Martin F-35 fighter jet, or may restrict intelligence-sharing and military sales to European partners.
As these fears mount, discussions surrounding the weaponization of technological dependencies have moved front and center in geopolitical conversations.
With U.S. companies controlling two-thirds of EU cloud services, there are growing worries that the U.S. could exploit this dependency for geopolitical leverage.
Hypothetical scenarios have emerged, such as the U.S. demanding that cloud service providers cut Denmark’s access amid a dispute over Greenland, or pressuring the Netherlands to restrict semiconductor exports to China through mechanisms like the Foreign Direct Product Rule (FDPR) and financial sanctions.
This precarious situation could lead to a withdrawal of European consumers from American technology as the U.S. signals its intent to use statecraft tools to target its partners in Europe.
In a notable response to these concerns, Microsoft President Brad Smith unveiled new commitments in April 2025, stating that if the company were ever ordered to suspend operations in Europe, it would contest such actions through litigation, store backup data in Switzerland, and grant the EU access to necessary data and code.
This evolving relationship marks a radical departure from traditional transatlantic ties.
Previously, it was assumed in the U.S., particularly within the technology sector, that Europe would comply with American demands due to its dependence on U.S. protection.
This reliance is further complicated by potential troop reductions planned by the Trump administration in Europe, prompting leaders in Europe to assess the reliability of U.S. military support and prepare for a scenario devoid of American backing.
Despite troop withdrawals, the Trump administration retains leverage, aiming to intertwine national security measures like export controls and sanctions with traditional trade tools including tariffs.
Recent U.S. attempts to connect tariff relief in the EU to the reduction of fines on U.S. digital companies, along with requests to eliminate the ‘Google Tax,’ demonstrate the overarching strategy of leveraging trade negotiations to influence European legislation.
Such tactics may accelerate both European and Chinese initiatives to indigenize technology and minimize risks associated with American dominance.
However, pursuing a ‘de-risking’ strategy poses significant challenges and expenses in the short term, due to U.S. supremacy in critical technologies and a strong extraterritorial legal framework.
As trade tensions escalate, the potential for conflict between the U.S. and EU in the tech sector becomes ever more apparent.
Digital trade discussions have evolved in this context, with long-standing debates over governance between the U.S. and EU come to a head.
For over a decade, the European Union has pursued a precautionary regulatory approach, regulating technologies before their release; this stands in stark contrast to the U.S. ethos of rapid innovation and disruption.
This divergence in philosophy has led the EU to reconsider its reliance on U.S. technology, a sentiment that has been brewing since the Snowden revelations regarding U.S. surveillance of allies.
In recent years, both parties have increasingly viewed digital trade as an extension of national power, with mutual dependencies complicating the statecraft landscape.
Digital trade encompasses e-commerce, digital services such as software and platforms, as well as data flows, which rely on physical infrastructure, including cables, servers, and data centers.
In 2023, U.S. and EU digital services trade reached a remarkable $848 billion, with the U.S. enjoying a surplus of nearly $123 billion.
However, this burgeoning trade is entrenched in the realities of physical supply chains.
International data flows, heavily reliant on subsea fiber optic cables, have been disrupted in recent years, exacerbating concerns over vulnerabilities in transatlantic digital dependencies.
The specter of governments weaponizing digital infrastructure looms large, drawing parallels to how Russia utilized energy supplies as a tool of coercion during conflicts.
The intertwining nature of U.S. and European tech systems means that businesses on either side of the Atlantic are often dependent on U.S. platforms and services for their operational needs.
Recent threats regarding the potential activation of a ‘kill switch’ for cloud services only serve to heighten anxieties on both sides of the Atlantic, as they foresee a scenario where such an act would invite reciprocal measures from Europe.
The European Union has begun taking steps to mitigate its risks, appointing a ‘technology sovereignty’ commissioner to oversee its digital and frontier tech landscape.
In March 2025, the Dutch Parliament approved measures encouraging a shift away from U.S. technology, advocating for a cloud system domestically controlled.
The EU also possesses considerable leverage in the digital economy, and the illusion of a one-sided dependency is increasingly being challenged.
The ongoing U.S.-EU relationship is complex, with vulnerabilities evident for both parties, and a full or partial decoupling would yield significant consequences.
The European Union has developed a series of new economic statecraft tools, including retaliatory tariffs and limitations on data transfers, that could be activated against U.S. actions perceived as coercive.
Of particular interest is the Anti-Coercion Instrument (ACI), which could allow the EU to respond aggressively to actions it deems coercive.
To activate the ACI, a proposal from the European Commission is necessary, requiring approval from the European Council with a qualified majority.
Given current transatlantic relations, the commission might not hesitate to implement the ACI should tensions escalate further.
Moreover, doubts regarding U.S. reliability have prompted increased investment in European defense sectors, notably with European Commission President Ursula von der Leyen’s proposal of an $866 billion plan to enhance defense capabilities in Europe.
Germany has also undertaken significant funding reforms to support military spending.
Traditionally, U.S. defense companies have benefited from such spending against a backdrop of familiar South Atlantic relations.
Yet, European militaries now grapple with over-reliance on American military technologies, wherein even EU-produced weapon systems often incorporate U.S. components.
This situation raises the specter of potential U.S. restrictions on military technology sales to European nations, leaving Europe with few avenues for retaliation, given the closed nature of the U.S. defense market.
Faced with the realities of military dependency, European nations are leaning towards domestic procurement and innovation to fill gaps in their defense capabilities, with France leading efforts to develop its own ITAR-free defense technologies.
Despite these challenges, the EU has been slow to construct essential digital infrastructure, which will be critical for future geostrategic initiatives.
The rise of hyperscale infrastructure, predominantly governed by cloud technology, is changing the landscape for digital businesses.
In April 2025, the European Union introduced its AI Continent strategy, demonstrating a commitment to building the necessary digital infrastructure to support a thriving AI economy.
Implementing such initiatives, however, is complicated by Europe’s lack of a unified capital markets framework, which inhibits risk capital investment.
To stimulate innovation, Europe must engage in fundamental reforms, establishing a capital markets union to foster competitive digital ecosystems.
The contrasts in U.S. and EU market dynamics further complicate the quest for technological independence in Europe.
Entrepreneurs are often deterred by restrictive bankruptcy laws that inhibit high-risk innovation, resulting in a talent drain to more favorable environments.
With these elements in mind, it is evident that the increasingly interwoven nature of digital, physical, and advanced technology presents a complex framework for negotiation and statecraft.
U.S. policymakers must recognize the risks inherent in escalating trade tensions and the potential ramifications of weaponizing digital dependencies.
The mere act of considering a ‘kill switch’ as a bargaining chip falls profoundly beyond traditional tariff disputes, signaling deeper fractures in the technological landscape and transatlantic relations.
In light of these developments, fostering reassurance and rebuilding trust is paramount for the future of U.S.-EU relations.
As strategists caution, a significant decoupling on digital fronts may not only change transatlantic relations but could also redefine global internet governance.
Emily Benson serves as a senior associate (non-resident) at the Center for Strategic and International Studies (CSIS).
Max Bergmann heads the Europe, Russia, and Eurasia Program at CSIS, while Federico Steinberg contributes as a visiting fellow within the same program.
image source from：https://www.csis.org/analysis/transatlantic-tech-clash-will-europe-de-risk-united-states
