U.S. Leverages Steel Tariffs to Push EU on Tech Policy

In a move that’s sent ripples across Brussels, U.S. Commerce Secretary Howard Lutnick has placed the European Union’s digital regulations front and center in trade negotiations. At a tense gathering with EU ministers, Lutnick made it clear: any relief from the punishing U.S. tariffs on European steel and aluminum will only come if the EU reconsiders its approach to tech sector rules.

The backdrop is a July 2025 trade agreement that had set the stage for reduced tariffs on key goods—wine, spirits, and especially metals. The EU was keen to see the U.S. lift or reduce its 50% tariffs on steel and aluminum, which have weighed heavily on European industries. But Lutnick’s latest intervention has complicated matters, tying tariff relief to a demand for a ‘more balanced’ regulatory environment for digital businesses in Europe.

Digital Rules Become the Dealbreaker

In interviews with Bloomberg and statements to Reuters, Lutnick was forthright: “We are talking to them about rolling back EU tech rules. In exchange for that, we will come up with a cool steel and aluminum deal.” The message was unmistakable. For the U.S., the EU’s expanding digital regulations—often designed to rein in American tech giants—have become a sticking point. Lutnick and U.S. Trade Representative Jamieson Greer landed in Brussels with a clear agenda, fresh from a meeting with EU Technology Commissioner Henna Virkunnen.

European officials, meanwhile, are treading carefully. Maros Sefcovic, the EU’s Trade Commissioner, acknowledged the challenge, expressing hope for progress but cautioning that “immediate breakthroughs” were unlikely. The EU, he indicated, remains open to regulatory cooperation but is wary of ceding too much ground, especially as its own digital strategy is seen as crucial to European economic sovereignty.

Tariffs, Tech, and the Transatlantic Trade Balance

What’s at stake is more than just the price of steel. The U.S. tariffs—currently at 50% for metals—have caused friction not just over trade, but over principles of market fairness and technological competition. The EU wants its goods subjected only to low tariffs, and in return is willing to discuss cooperation on energy, economic security, and other regulatory domains, including those relating to China.

But the U.S. sees the EU’s digital policies as protectionist, targeting American firms under the guise of consumer protection and competition law. Lutnick’s warning is a shot across the bow: if Europe wants economic relief, it must allow for a digital playing field less stacked against U.S. technology companies.

Negotiations and the Road Ahead

The July trade deal, still awaiting implementation pending approval from European leaders, set U.S. tariffs at 15% on many EU goods, with the promise of further reductions. The EU reciprocated by lowering some of its own duties. However, with Lutnick’s new conditions, the timeline for actual tariff relief has become uncertain—now potentially delayed until at least March or April 2025.

European businesses and policymakers now find themselves at a crossroads. Do they relax digital regulations, risking the integrity of their tech sector, or hold firm and endure ongoing tariffs? The answer will shape not only transatlantic trade, but the future of digital innovation and competition in Europe.

Behind closed doors, negotiators are weighing options. The EU has signaled openness to dialogue on energy and security, perhaps hoping to build goodwill. But the digital rules—covering everything from data privacy to platform regulation—are deeply embedded in the bloc’s economic vision. Compromise won’t come easy.

The standoff over U.S. steel tariffs and EU digital regulations now defines a new era of transatlantic relations, where trade in goods is inextricably linked to control over the digital marketplace. The outcome of this high-stakes negotiation will have lasting consequences for industries on both sides of the Atlantic.

Thought you’d like to know

What are the current U.S. tariffs on EU steel and aluminum?

The United States currently imposes a 50% tariff on certain steel and aluminum imports from the European Union. These tariffs were a central point of the recent negotiations and are the primary leverage the U.S. is using.

Which specific EU digital regulations is the U.S. targeting?

While not all were named, U.S. officials have consistently criticized the Digital Markets Act (DMA) and the Digital Services Act (DSA). These regulations aim to curb the power of large tech platforms and ensure fair competition.

Has the EU agreed to change its digital rules?

No, the EU has not agreed to any changes. European officials have stated they are open to regulatory cooperation but have cautioned against expecting immediate breakthroughs or a full-scale rollback of their digital policy framework.

How does this affect the July 2025 trade deal?

The implementation of the deal is now in question. The U.S. has linked its tariff reductions to progress on digital regulation, potentially delaying the deal’s benefits until at least Spring 2025, if not longer.

Why is the U.S. making this demand now?

American tech companies have lobbied heavily against EU digital rules, arguing they are unfairly targeted. The U.S. government is using a point of significant economic leverage—the metal tariffs—to address these corporate concerns at a strategic level.

Trusted Sources

Bloomberg, Reuters, Associated Press