Trump’s tech tariffs: From protecting production to protecting Big Tech’s profits

The Trump administration’s tariff policy appears to have made the leap from protecting domestic production to protecting tech oligarchs. Meta CEO Mark Zuckerberg’s strategy, “We’re going to work with President Trump to push back on governments around the world” seems to be working.  

Presidential action memo 

On Feb. 21, President Trump issued a memorandum to appropriate agency heads, directing them to develop tariffs and “other responsive actions” in retaliation against “regulations imposed on United States companies by foreign governments that could inhibit the growth or intended operation of United States companies.”  

The groundwork for this was laid by Mark Zuckerberg’s interview with podcaster Joe Rogan, where Zuckerberg said “the U.S. government should be defending its companies.” That wish is being fulfilled by the presidential memo entitled, “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties.” Big Tech has found its counterattack to the European Union’s (EU) digital competition and content moderation policies.  

The memo asserts that “Foreign countries have additionally adopted regulations governing digital services that are more burdensome and restrictive on United States companies than their own domestic companies.” Although it does not name specific nations and regulations, the memo appears to be in response to the EU’s digital initiatives. These statutes apply only to the largest companies deemed to be marketplace “gatekeepers.” Those dominant companies are, however, headed by CEOs who sat in the first row of the Trump inauguration.  

Extraterritorial oversight: a double standard? 

The presidential instructions strike an outraged tone: “foreign governments have increasingly exerted extraterritorial authority over American companies.” Yet, such “extraterritorial authority” is neither new nor unique. American products sold abroad have always had to comply with local regulations. From drug and medical device approval to food labels such as what can be called champagne, foreign countries govern their own markets—as does the United States. 

The Trump administration is no stranger to imposing its regulatory will on foreign products. European automobiles must meet different safety and emission standards. Imported food products must comply with Department of Agriculture and Food and Drug Administration regulations. Foreign digital cloud services must adhere to U.S. national security and data protection laws. These are just a few examples of the United States practicing what the Trump memo derided as “extraterritorial authority.” 

Trump administration policies—such as the destruction of diversity, equity, and inclusion (DEI) initiatives—have themselves become extraterritorial. For instance, the British pharmaceutical company GSK (GlaxoSmithKline) suspended its DEI activities in the U.K. due to Trump’s executive orders on DEI, citing the need to comply in the company’s largest market. GSK has since removed references to diversity, equity, and inclusion from its website, suspended mentoring groups for women, and paused a program helping lower-income students enter the workforce—all because of President Trump’s executive orders. 

Digital sovereignty: protecting domestic industry or Big Tech profits? 

The rationale President Trump has used for tariffs on Canada, Mexico, and China has been stopping the flow of illegal drugs, protecting domestic production of aluminum and steel, and maintaining the kind of complex scale manufacturing exemplified by the auto industry. But the new “Defending American Companies and Innovators” memo extends tariffs to “digital services,” arguing that when these services enter foreign markets, local regulations “violate American sovereignty.” 

The concept of national sovereignty refers to a nation’s right to govern its domestic affairs free of external interference. The Trump memo expands such sovereign claims to Big Tech profits. Through regulation, it asserts, foreign nations are “appropriating revenues that should contribute to our Nation’s well-being, not theirs.” 

This represents a fundamental shift in trade policy. Traditionally, the goal of tariff policy is the protection of domestic production by reducing the demand for foreign imports. The Trump memo, in contrast, targets foreign regulatory action not because they reduce consumer demand, but because they increase costs for Big Tech—cutting into their profit margins. 

Citizen protection vs. corporate protection 

For the last several decades, Big Tech’s lobbying has kept American policymakers from establishing behavioral expectations for digital markets. The result has hurt consumer privacy, constrained marketplace competition, and facilitated lies and misinformation.  

In contrast, the EU has passed laws attempting to prioritize consumer rights over corporate rights. The General Data Protection Regulation (GDPR) addresses privacy. The Digital Markets Act (DMA) deals with competition. The Digital Services Act (DSA) establishes standards for content decisions. 

These EU rules do not make American digital products less desirable to European consumers. On the contrary, they enhance digital products by making them safer, more private, and more competitive—at no added cost to consumers. Rather than embracing these rules as improvements, Big Tech frames them as an assault on the profit margins that made them wealthy.  

Having successfully lobbied the U.S. government to ignore digital marketplace protections for Americans, Big Tech now wants the American government to strong-arm other nations into doing the same. The Trump memo’s expansion of tariff policy, from protection against undercutting domestic production to the protection of corporate profits, represents a dramatic and fundamental alteration of trade policy. 

Does the American internet fiefdom redefine trade protections? 

A handful of American companies dominate the global digital marketplace. The Trump memo ventures into their internet empire, targeting foreign efforts to do what the U.S. has failed to do—establish behavioral expectations for the digital marketplace.  

Europe’s digital regulation does not make American services less desirable. Instead, the suggested Trump tech tariffs go after the efforts of the EU and others to make digital products safer and more competitive.  

The EU has said it would respond “swiftly and decisively” should the Trump administration take “unjustified measures” against its digital rules. Tools available include the Anti-Coercion Instrument (ACI), which enables the body to deploy a wide array of measures against economic coercion, encompassing trade, investment, or other policy actions. 

Mark Zuckerberg has argued that the only way U.S. tech companies like his “can push back on this global trend is with the support of the U.S. government.” Thanks to the proposed Trump tech tariffs, that government—which has already launched a tit-for-tat trade war over traditional hard goods—now invites another potential trade war, this time fought in defense of Silicon Valley’s bottom line.