By Pieter Cleppe
Last week, the European Commission decided to impose a fine of 890 million euros on Google, this time under the new European “Digital Markets Act” (DMA). It is yet another European fine running into the billions levied on an American tech company. Once again, Google is being forced to cough up money on the basis of the highly dubious rationale that it should not be allowed to promote its own products in its own shop. EU antitrust policy – and antitrust politics in general – has always been notoriously arbitrary and for long a thorn in the side of classical liberals. An entire industry of lawyers and economists makes a living from it. However, following years of case law, EU fines based on antitrust law are far more predictable than DMA fines, which Politico, a publication rather loyal to the European Commission, describes as “arbitrary to a certain extent, and not without political considerations.”
This time, there is an additional dimension to the issue. It is once again putting pressure on the already strained economic relationship between the EU and the US. It is a shame that this is happening just after the EU approved the so-called Turnberry Agreement. This was concluded last summer between US President Donald Trump and European Commission President Ursula von der Leyen, after Trump had launched his tariff war. It sets a ceiling on the customs tariffs the US may impose on exports from the EU.
Last week, too, more clarity emerged on how Trump intended to extend the customs tariffs he had previously extended – despite the fact that they had been struck down by US courts – for a little longer still. The US legal justification for this is now the lack of a European framework for combating forced labour. A mere excuse, of course, but at the very least the extension did not exceed the maximum customs tariffs that the US is permitted to impose under the Turnberry Agreement. Furthermore, that EU framework is due to come into force at the end of 2027, which offers the prospect of a reduction.
In any case, the Turnberry Agreement is now under threat, warned German MEP Bernd Lange, who chairs the European Parliament’s Committee on Trade, because in response to the EU fine imposed on Google, Trump threatened once again to impose countermeasures, which may well breach the Turnberry Agreement. In other words: the EU is, quite unnecessarily, reigniting a row with Trump, just when things were hopefully starting to settle down, a few months before the US mid-term elections.
UPDATE: President Trump announced a Section 301 investigation into the European Union. 🇺🇸🇪🇺
The move follows recent EU enforcement actions against US firms and is part of a broader effort to review the bloc's trade practices.
The announcement came after the EU imposed a $890… pic.twitter.com/JJ0J3TuBUM
— Donald J Trump Posts TruthSocial (@TruthTrumpPost) July 26, 2026
Conflicts over regulation
The EU is also regularly ending up into conflict with other trading partners these days. Earlier this month, the European Parliament decided not to classify soybean oil as a ‘high-risk’ raw material for indirect land-use change, within the framework of the Renewable Energy Directive (RED). The protectionist element here is that soybean oil is treated differently from non-European imports, such as palm oil, which is currently the only feedstock in the ‘high-risk’ category.
In response, Belvinder Sron, Chief Executive Officer of the Malaysian Palm Oil Council, strongly criticised the decision: “This is about consistency, not competition between crops. When two feedstocks are assessed against the same rules, they must be judged on the basis of the same evidence.”
The facts do indeed show that, according to Global Forest Watch, Malaysia lost only 0.56 per cent of its remaining primary forest in 2024. This means the country is performing better than Sweden, which recorded a loss of 0.87 per cent. Local Malaysian industry standards appear to have resulted in a significant reduction of 13% between 2023 and 2024. Nevertheless, ‘deforestation’ is being used as a justification for making this distinction.
Moreover, it is questionable whether the European Parliament’s decision is in line with World Trade Organisation (WTO) rules, as the WTO has previously raised questions about the EU’s criteria for treating such products more strictly.
Following a similar dispute between the EU and Malaysia, a World Trade Organisation (WTO) panel drew up a report on this matter a few years ago. That report confirmed the European Union’s general right to pursue environmental objectives within the framework of the Renewable Energy Directive. However, it found that the EU administered high and low Indirect Land Use Change (ILUC) criteria inconsistently with international trade rules due to outdated data and design flaws
In particular, the WTO panel objected to the fact that the EU had failed to assess the data in a timely manner. It also considered the EU to not have applied the measure even-handedly and it determined that certain low ILUC risk certification criteria and requirements were “overly vague and ambiguous, as well as incomplete” and that a ten-year limit on eligibility for low ILUC risk certification disadvantaged palm oil, as this crop only bears fruit after several years. This led the panel to conclude that the EU had therefore ‘applied the high ILUC risk threshold and the phase-out in a manner inconsistent with Article 2(1) of the TBT Agreement’.
Tensions with India and China
Furthermore, the EU is also causing tensions with trading partners over the European climate tariff CBAM, or the “Carbon Border Adjustment Mechanism”. This imposes tariffs on trading partners in a Trump-like manner when, in the EU’s view, they do not sufficiently adopt European climate policy. This is despite the fact that such policies cause significant damage to the competitiveness of European companies, as they artificially keep energy prices in Europe extremely high.
Although India recently concluded a trade agreement with the EU, it is particularly displeased with the CBAM. Poorer African countries, too, are being hit hard.
The EU's protectionist climate policy measure CBAM, which hurts Europe's chemical industry badly, is now also undermining good trade relations with India https://t.co/5n1aMsWtLy
— Pieter Cleppe (@pietercleppe) June 22, 2024
Furthermore, there are also mounting tensions with China, as a result of the growth in Chinese exports. This has been artificially inflated by an undervalued currency and massive subsidies. Recently, the EU and China agreed to hold three months of negotiations to prevent a trade war over the trade imbalance, in their first joint statement in seven years, but there is considerable pressure to impose higher tariffs on China, just as Trump did.
However, such ‘tit-for-tat’ protectionism against China has, in fact, failed to yield positive results in recent years. In 2024, the introduction of EU tariffs failed to curb imports of Chinese electric cars, as Chinese manufacturers switched to hybrid cars and local production in response. In April 2025, after US President Donald Trump had raised import duties on China to over 100 per cent, China responded by imposing targeted restrictions on the export of rare-earth metals, which affected US defence and automotive manufacturers and disrupted global industrial supply chains. Chinese exporters also simply rerouted trade flows via South-East Asia and Mexico to circumvent the US import tariffs. Following talks with Chinese President Xi in October 2025, Trump reduced some of the import tariffs on China once again.
A new study by economists Joep Konings, Glenn Magerman and Alberto Palazzolo now shows that, for the EU, a trade war with China is simply not a good idea either. According to the study, the European economy would be severely affected in the event of targeted Chinese retaliatory measures against specific EU export sectors. Chinese retaliatory measures would amount to “an average GDP loss for the EU” of 0.07 per cent of EU GDP.
Daniel Kral of Oxford Economics recently noted the following:
“The EU’s key problem is not China dumping goods in the EU – as the EU’s share in China’s exports is flat. It is, first of all, a loss of EU exporters’ market share in third markets, and secondly a staggering collapse in the EU’s share of China’s imports – from 12% in 2019 to 8% now. No EU levers address these two things.”
Even those who favour greater protectionism towards China should, at the very least, demand that the EU abandon its own suicidal climate policy before hitting its own consumers and importers with higher customs tariffs.
Furthermore, at EU level, it should be recognised that a hard-line confrontation with China or even the US requires, at the very least, the maintenance of good relations with other trading partners. The EU has certainly concluded a number of new trade agreements in recent years, which is a good thing, but Brussels’ regulatory frenzy is once again leading to a great deal of new protectionism through the back door. Anyone who falls out with all their friends would be wise not to make any new enemies.