CEI Joins ATR’s Coalition Letter in Support of Ending European Attacks on U.S. Tech and Telecommunications Companies

Dear Mr. President:

Europe’s campaign for “digital sovereignty” is nothing more than a euphemism
for targeting American businesses. We write to commend your Administration’s
strong and principled response to the European Union’s systematic effort to
weaponize regulation against the most successful technology companies in the
world — which happen to be American — and urge you to continue standing up
to these shortsighted attacks on a critical sector of our economy.

The EU and its member states claim their digital laws are designed to promote
fairness and healthy competition. The reality is far simpler and far less flattering:
these rules disproportionately burden American companies while insulating
European competitors from equivalent scrutiny. Europe presents itself as
welcoming American innovation and leadership, right up until American firms
outperform their domestic champions. At that point, the regulatory apparatus
kicks into gear, not to protect consumers, but to kneecap the competition.

Europe has become increasingly candid about this approach. EU policy experts, in
response to U.S. engagement, recently claimed that the fact American companies
are “feeling the pain” of their enforcement actions means “the laws are actually
working” and is, in fact, “evidence” for why “they should be doubling down.” In
other words, the pain is the point.

This antagonism extends well beyond economics. It damages the security and
strategic cooperation that has anchored the transatlantic relationship for decades.
Worse, it opens the door for dangerous, unreliable Chinese competitors to gain
ground as American firms are pushed out of European markets by discriminatory
fines, fees, and regulatory landmines. The EU’s gain is Beijing’s windfall.

The EU’s Targeted Tactics

The EU’s so-called “digital sovereignty” measures are non-tariff barriers in
regulatory clothing — political tools cloaked in complexity to obscure their
protectionist intent. They impose asymmetric costs on American firms while
extracting billions in revenue from them, with little to no comparable burden
placed on European competitors.

While our European friends continue to come up with new and creative tactics,
four laws in particular serve as the primary mechanisms for extorting American
firms:

The Digital Networks Act (DNA) illustrates how Brussels operates. The European
Commission is actively working to extend the law beyond telecoms to encompass
cloud services and their infrastructure. A recently leaked draft reveals this
expansion as a backdoor mechanism to impose sweeping new network fees
targeting American providers. This would constitute a direct and brazen violation
of the U.S.-EU trade framework agreed upon last summer, which explicitly
affirmed that the EU “will not adopt or maintain network usage fees.” The ink is
barely dry on that agreement, and it is already being circumvented.

The Digital Markets Act (DMA) imposes special obligations on so-called
“gatekeepers” — the largest, most successful platforms — which are almost
exclusively American. Not one designated company is European. In November,
the Commission opened investigations into Microsoft and Amazon under the
DMA while acknowledging, in its own documents, that neither clearly meets the
law’s stated thresholds.

The General Data Protection Regulation (GDPR), while framed as consumer
protection, operates as a mechanism for extracting private company data and
imposing massive penalties. Eighty-three percent of GDPR fines — totaling more
than $5 billion — have been levied against American-owned companies. Eight of
the ten largest fines targeted U.S. firms or their subsidiaries. While the rules
technically apply to any company operating in the EU, enforcement tells a
different story. These penalties function less as consumer protection and more as
de facto tariffs on U.S. firms.

Digital Services Taxes (DSTs) complete the picture. Levied by individual EU
member states and copycat governments around the world, these taxes are based
not on where a company produces value, but on where users happen to click.
They fall almost exclusively on large American technology companies, asserting
taxing rights with no basis in traditional principles of production or presence.

As economist Sinclair Davidson documents in his study “How Digital Services
Taxes Violate Constitutional Principles and Threaten American Commerce,” U.S.
firms already pay nearly $3 billion annually in DSTs — a figure that could double
by 2030 and reach $9.6 billion under broader adoption, with cumulative costs
over the next decade potentially hitting $117 billion. These policies strip revenue
from American firms, pass costs on to consumers through higher prices, and
divert revenue away from the U.S. Treasury.

Standing Up for American Workers and Consumers

The EU’s digital regulatory regime imposes compliance costs and lost revenue
estimated at up to $100 billion annually on U.S. companies. The consequences
ripple far beyond corporate balance sheets. Fewer American jobs are created as
companies absorb punishing compliance burdens, while investment in research
and development shrinks, slowing the pace of innovation. Those costs do not
remain overseas — they are ultimately borne by American workers and
consumers. Europe’s regulatory aggression is, in effect, a tax on the American
middle class.

We applaud your clear-eyed response to this challenge. You have rightly pointed
out that the “EU makes more from fines on US tech, than tax from ALL of public
European tech.”

That message has been reinforced across your Administration. During a recent trip
to Brussels, Secretary Lutnick called on the EU to reconsider its digital rules and
find “a balanced approach that works with us.” Secretary Bessent has been equally
direct, describing the EU’s digital taxes and fines as a centerpiece of trade
negotiations and making clear your Administration is pushing back on “tariffs,
non-tariff measures, currency manipulation, government subsidies and unfair
taxation and fines.” Kevin Hassett has similarly warned that countries maintaining
these policies will face “the wrath of U.S. Trade Representative Jamieson Greer.”

Stopping the Export of the European Model

But the most recent U.S. efforts to revisit these policies have been met with a
blunt response from European officials: the time for discussion has passed, and
the U.S. should simply “let go” of trying to change them. That posture violates the
most basic principles of fairness and reciprocity that our allies claim to respect. It
cannot go unanswered.

More concerning still is the reach of Europe’s approach. European leaders,
regulators and industry groups are actively promoting and even directly lobbying
for the adoption of their digital rulebook across Latin America. As a result,
countries in our own hemisphere have begun adopting similar policies, giving
China a foothold in our own backyard.

The EU’s digital framework must not be permitted to become the global standard
by default. The window to prevent that outcome is now.

As your Administration has rightly argued, eliminating discriminatory digital
taxes and regulatory fees must be a precondition for any future trade agreement
with the European Union. Anything less risks entrenching these practices and
encouraging their expansion. Without a strong response, American innovators will
continue to face rising costs and increasingly distorted competition.

We stand ready to support your efforts to defend American workers, American
innovation, and the principles of fair and reciprocal trade as you lead our nation
into a new era of prosperity.

Sincerely,

Grover Norquist
President
Americans for Tax Reform

Lorenzo Montanari
Executive Director
Property Rights Alliance

James Erwin
Executive Director
Digital Liberty

Ryan Ellis
President
Center for a Free Economy

David Williams
President
Taxpayer Protection Alliance

Phil Kerpen
President
American Commitment

Karen Kerrigan
President & CEO
Small Business & Entrepreneurship Council

Sal Nuzzo
Executive Director
Consumers Defense

Daniel J. Mitchell
President
Center for Freedom and Prosperity

Daniel Erspamer
CEO
Pelican Institute for Public Policy

Kevin Riffe
Chairman
West Virginia Center-Right Coalition

Gerard Scimeca
Chairman
Consumer Action for a Strong Economy

Jessica Melugin
Director of the Center for Technology & Innovation
Competitive Enterprise Institute

Chuck Muth
President
Citizens Outreach

Andrew Langer
President
Institute for Liberty

Tom Giovanetti
President
Institute for Policy Innovation

Jason Isaac
CEO
American Energy Institute

Scott Sturgill
President and CEO
Churchill Strategy Group

Andrew Gins
Director
Shareholder Advocacy Forum