What is reported, and what is not
In September 2026, a Trump administration official told The Times that Washington plans to open a Section 301 investigation into the EU, possibly within the month. According to that reporting, the probe would target enforcement of the Digital Markets Act, including the €890 million Google fine of July 23, 2026, and the digital services taxes (DSTs) of France, Italy, Spain and Austria. The UK is reportedly expected to be exempted. We could not confirm that the U.S. Trade Representative has formally opened an investigation, and no start date or tariff rate has been announced. This analysis treats the plan as reported, not as a launched proceeding.
The strongest case for Washington's complaint
The U.S. position deserves a fair statement. DSTs are levied on gross revenue, not profit, so they can fall on loss-making firms. They are aimed at a handful of foreign companies, and they undercut the multilateral tax deal that governments spent years negotiating. When USTR first examined DSTs in 2020, it asked whether they were retroactive or extraterritorial, discriminated against U.S. companies, taxed revenue rather than income, or were meant to penalize particular companies for their commercial success. Those are serious questions, and on the design of DSTs the critics have a point. Revenue-based taxes distort pricing, and they tend to be passed on to the small businesses that advertise and sell on these platforms.
Why the DMA does not belong in the same bucket
The reported probe puts two different things in one file. A DST is a tax, and it is plainly a trade irritant. The DMA fine is something else: the enforcement of a competition-style rulebook against a specific finding of conduct. On July 23, 2026, the Commission fined Google €890 million in two decisions, €460 million for self-preferencing in Search and €430 million for restricting how Play developers can steer users to other purchase channels. Google has 60 days to comply or face periodic penalties.
We have criticised the DMA's breadth before, and its remedies deserve scrutiny. But the underlying allegation, that a dominant gatekeeper ranks its own shopping, hotel and travel results above rivals, is a conventional competition complaint that U.S. regulators have themselves pursued. Treating the enforcement of such a rule as a trade barrier invites other governments to treat U.S. antitrust cases the same way. A pro-innovation policy should want disputes over platform conduct fought on evidence, in court, with appeal rights, and not settled by tariff threat.
The record says threats rarely become tariffs
We have run this experiment before. USTR opened DST investigations on ten jurisdictions in June 2020. On June 2, 2021, it announced tariffs on six of them and suspended them immediately for up to 180 days to give OECD and G20 talks time. The proposed duty was 25% on goods from Austria, India, Italy, Spain, Turkey and the UK, covering trade worth from about $65 million (Austria) to about $887 million (UK). The process produced leverage and negotiation, not a durable tariff wall.
The 2026 setting is different in one respect that matters. On June 26, Trump threatened that any country imposing such a tax would face a 100% tariff on all goods sent to the United States. Trade press at the time noted the threat had no obvious legal basis, given a Supreme Court decision earlier this year striking down the administration's sweeping global tariffs. A Section 301 case is the lawful route: it requires an investigation, a record, and a determination. That is the likely reason for the reported probe. It is also slow, which suggests the aim is bargaining power in a dispute that digital taxes were excluded from in the May 2026 EU-U.S. trade deal.
Who actually pays
If the probe ends in tariffs, the bill would not be sent to Google. Tariffs on European goods raise costs for American importers and consumers. EU retaliation, if it came, would hit U.S. exporters in unrelated sectors. Meanwhile, the underlying DST problem would stay unsolved, because the taxes exist partly out of frustration that the multilateral deal never settled where digital profits are taxed.
There is also a second-order effect. The EFF recently described the push for "digital sovereignty" as, in part, "reducing dependency on foreign (and particularly American) cloud infrastructure, chips, platforms". Tariff threats over regulatory enforcement feed exactly that impulse. Every time Washington frames European rules as a trade attack, it strengthens the argument for building alternatives and weakens the argument for open, interoperable markets that benefit American and European developers alike.
A better approach
A proportionate response would separate the two issues. On DSTs, press for a negotiated sunset or credit mechanism tied to a workable multilateral solution, which is where the 2021 episode ended up. On the DMA, challenge specific remedies through the legal and regulatory channels the law provides, and make the case with evidence that particular obligations harm users or security, instead of contesting the Commission's right to enforce at all. And for the EU, the lesson is that gross-revenue taxes and sweeping ex ante rules carry a trade cost that should be weighed against their benefits.
Watch three things: whether USTR publishes a Federal Register notice with a defined scope, whether the UK exemption is formalised, and whether Google's 60-day compliance window passes without new penalties. Those will show whether this is a negotiating move or the start of a real escalation.