French President Emmanuel Macron, European Union Trade Commissioner Maroš Šefčovič, and a bevy of European parliamentarians have jetted across the Atlantic Ocean. The immediate priority is to head off the Trump administration’s embrace of Russia. But they are also attempting to defuse trade and tech tensions. 

Explosive fault lines are emerging. The US has issued a memorandum threatening tariffs to counter what it considers discriminatory European tech rules that impose digital taxes, fines, and other practices levied on American companies. In response, the EU has alternated between threatening retaliation and suggesting that it might be willing to water down digital regulations. 

The tension was visible at France’s recent AI Action Summit, which I attended. Although the summit’s final statement, Inclusive and Sustainable AI for People and the Planet, gathered more than 60 signatories, the US and the United Kingdom refused to join, arguing that it would shackle innovation and lacked sufficient muscle on security. China, by contrast, jumped in, burnishing its credentials as a cooperative global player.  

Beneath the surface, Beijing is forging its own path. It files more AI-related patents and publishes more scientific research than anyone else, and it is racing ahead in large-scale deployment – robotized factories, traffic systems, and facial-recognition for mass surveillance. Europe’s high-minded AI principles stand in stark contrast to both Washington’s laissez-faire approach and Beijing’s state-driven push. 

The summit drove home a familiar truth: the global AI race is anything except level. The United States and China command the field, each leveraging distinct strengths in data, advanced semiconductors, and large-scale deployment. Championing a human-centric approach, Europe grapples with harmonizing its fragmented market and enforcing newly adopted digital regulations – all while lacking robust homegrown giant players. Smaller nations in Africa, Southeast Asia, and Latin America are overshadowed by big-power rivalries, left to wonder if they will be locked into extractive data deals without the digital infrastructure or resources to compete. 

The US still holds the AI pole position. According to Stanford University’s AI Index, American companies receive eight times more private AI funding than Chinese firms – a key reason they outpace rivals in advanced research, hardware development, and global brand recognition. US tech leaders Google, Amazon, Microsoft, and OpenAI command the frontier of large language models, while US chipmaker Nvidia dominates the design of high-performance semiconductors essential for training these models. 
The White House – keen to maintain that lead – recently announced Project Stargate, a plan to inject $500 billion into the US AI ecosystem.   

Yet early this year, an unlikely contender reminded everyone that money alone does not guarantee success. DeepSeek – a Chinese firm achieving ChatGPT-like performance with minimal resources – underscored that limitless spending does not automatically produce breakthroughs. At the same time, Washington’s escalating export controls on advanced semiconductors threaten to undercut US companies reliant on global supply chains, while pushing China to accelerate domestic chip manufacturing. 

In this climate of intensifying US-China competition, Europe is moving fast to bolster its own digital sovereignty. The European Commission has introduced InvestAI, a €200 billion initiative that includes a €20 billion fund for AI gigafactories. These hubs aim to give European researchers and companies, large or small, the tools to compete globally. French President Macron supplemented this momentum with a €109 billion commitment to AI research. 

The deep question remains whether the race for AI and overall tech dominance will overshadow the urgent push for guardrails. Paris illustrated that, despite lofty talk of inclusive and sustainable AI, major powers remain reluctant to impose meaningful limits. As the technology races ahead, democracy, privacy, and fairness risk being sidelined –– and small players risk being left further behind.  

The recent US memorandum targets the EU’s digital rulebook, primarily the Digital Markets Act and Digital Services Act, which regulate competition and social media. Several US companies face investigations under the laws, including Elon Musk’s X, Meta, Google, and Apple. The Trump administration is also investigating if the laws “undermine freedom of speech.” The US Trade Representative is to deliver a report on this matter by April 1. 

For President Trump and his supporters, EU laws discriminate. Jim Jordan, the head of the US Congress Judiciary Committee, wrote to European Commission Executive Vice President Teresa Ribera to “express our concerns that the DMA may target American companies.”  

In response, European officials insist that they will apply the rules evenly no matter the company’s origin, be it American, European, or Chinese. European parliamentarians are visiting Washington to press home this message.  

At the same time, Europe is moving to simplify onerous compliance requirements of its new AI Act, in part to appease Americans and in part to sharpen the bloc’s competitiveness. Just after the Paris AI summit, the EU withdrew its plans for an expanded AI Liability Directive.  

Whether these moves will be enough to head off a bloody trade and tech war remains uncertain. If Brussels concedes too much, it could squander the moral credibility that underpins its bid for global digital leadership. If it does not concede enough, the Trump administration could follow through with its threats to impose tariffs.  

Either way, some in Europe are looking to “derisk” not only from China, but also from the US.  “If Europe hopes to safeguard its own sovereignty and values, it must strategically decouple and dramatically lessen its dependence on companies that are either seeking confrontation or are otherwise vulnerable to being weaponized by Washington,” argues Marietje Schaake, former European Parliament lawmaker, author, and cyber expert at Stanford University.  This view of US tech as an “enemy” is new – and bodes ill for transatlantic cooperation. 

Anda Bologa is a non-resident Fellow with the Tech Policy Program at the Center for European Policy Analysis. During her tenure at the European Union Delegation to the United Nations, she was responsible for high-level negotiations on artificial intelligence resolutions and the United Nations Global Digital Compact. 

Bandwidth is CEPA’s online journal dedicated to advancing transatlantic cooperation on tech policy. All opinions are those of the author and do not necessarily represent the position or views of the institutions they represent or the Center for European Policy Analysis.