Trump escalates EU tech fight with new tariff threat

President Trump threatened Friday to impose "a substantial tariff" on the European Union over the bloc's penalties against U.S. technology companies.

Why it matters: It opens a new front in the transatlantic trade dispute, with Trump signaling he's willing to use tariffs to retaliate against European regulation of American tech giants.

Catch up quick: The European Commission fined Google $1 billion this week under the bloc's Digital Markets Act, saying the company unfairly favored its own services and restricted app developers.

What they're saying: "The United States of America is not a 'PIGGYBANK' for Europe, nor will we allow it to be," Trump posted on Truth Social.

Trump said he will initiate a trade investigation under Section 301 of the Trade Act of 1974, the administration's new — and more bureaucratic — go-to route for imposing tariffs.

"The European Union will pay a very big price for this illegal and highly unethical conduct ... The penalties will be entirely reversed and, we anticipate, a substantial TARIFF to be placed on them at the earliest possible moment," Trump said.

Between the lines: The Google fine is part of a broader EU crackdown on Big Tech. Brussels also fined Apple and Meta last year, accusing the companies of abusing market power.

The Trump administration argues the bloc's digital rules unfairly target America's biggest technology firms.

What to watch: Top Trump trade official Jamieson Greer warned this week that the bloc's escalating crackdown on American tech firms is raising tensions between the two blocs.

Greer said the actions "pose a real risk to the continuation of transatlantic stability with respect to trade."

"What I can tell you is we're not going to let Europe control the global regulation of our companies, which generally give a lot of free services to consumers and provide a lot of consumer welfare," Greer told Axios earlier this month.

Friction point: The tensions put the Trump-negotiated U.S.-EU trade deal at risk. If tariffs do materialize, they likely would take some time — Section 301 investigations can take months to play out.

For their part, EU officials have previously insisted that any new tariffs would breach the trade deal.

The bottom line: Disputes over digital regulation are spilling over into trade policy, adding another source of uncertainty to one of the world's largest economic relationships.