“The European Union was formed to screw the United States. That’s the purpose of it and they’ve done a good job of it.” So claimed U.S. President Donald Trump in late February as he geared up to levy massive tariffs on Washington’s rivals and allies alike. His administration asserts that the EU hurts U.S. exporters by erecting barriers to free trade, including tariffs, state subsidies, and unfair regulations on American firms. The prior month, Vice President JD Vance had lodged his own complaints about Europe’s alleged perfidy, threatening that the United States might withdraw its security guarantees from Europe if the EU continued to aggressively regulate U.S. tech companies. This threatening rhetoric turned into reality in April, when Trump announced a blanket 20 percent tariff on goods from the European Union, as well as more targeted 25 percent penalties on steel, aluminum, and cars—all part of a blizzard of new tariffs on countries around the world that Trump dubbed “Liberation Day.” Although the Trump administration has since reduced the blanket tariff to ten percent as part of a 90-day “pause,” the targeted tariffs remain in place.
EU officials have approved a set of retaliatory tariffs targeting products such as poultry, grains, and metals, but these could still be suspended in reaction to the newly announced pause. But in seeking an off-ramp from tit-for-tat escalation, the EU may agree to make broader concessions to Washington. Those could include trimming the thicket of regulations that seek to protect EU citizens and constrain private companies. Were that to happen, the EU would risk losing what makes it truly influential in the world: its global regulatory superpower.
The EU determines national and corporate regulatory standards in many areas, including data privacy, market competition, the use of pesticides on farmlands, and corporate sustainability practices. But thanks to its size, the standards and rules it imposes domestically often get voluntarily adopted abroad by multinational companies that want both simplicity and smooth access to the European market. As a result, the EU ends up regulating the food people eat, the air they breathe, and the items they produce and consume not just in Europe but around the world. Even the powerful U.S. tech giants such as Apple, Google, Meta, and Microsoft use the EU’s General Data Protection Regulation as their global privacy policy. The combination of the EU’s market size, its high regulatory standards, and its resolve to enforce them grants the union an extraordinary amount of global regulatory influence—a phenomenon that one of us (Bradford) has dubbed “the Brussels effect.”
As the EU has faced mounting geopolitical challenges, the Brussels effect has remained a key pillar of its global power. And behind this power also lies Europe’s normative appeal: unlike the Chinese model of statist regulation or the traditional American model of deregulatory market capitalism, the EU’s regulatory approach puts the rights of citizens first. EU regulations in areas such as data privacy, content moderation, environmental protection, and product safety have therefore become a template that many governments around the world emulate, benefiting countless people who never set foot on European soil.
And yet today, the EU seems poised to trade away its leverage as a global regulatory superpower. In January, Meta’s founder, Mark Zuckerberg, appealed to the Trump administration to pressure Europe to loosen its regulations on U.S. tech firms, likening Brussels’ antitrust fines to tariffs on American companies. According to Zuckerberg, the EU was “screwing with” U.S. industry. Subsequent media reports suggested the EU was thinking of shelving probes into Apple, Google, and Meta in response to threats from the Trump administration.
The Trump administration’s tariffs and threats of withdrawing security guarantees can’t simply be brushed off, but on their own they cannot force EU regulators to capitulate. The EU has considerable leverage as the United States’ largest bilateral trade and investment partner and the primary market of choice for most American companies. If the EU lets the Brussels effect die out, it would not be a defeat but an unnecessary surrender. In fact, the greater threats to the EU’s regulatory power today are those coming from inside the EU, such as calls by European industry for relaxing regulation in the name of enhancing competitiveness. The EU must not bend in the face of American pressure and domestic rancor. By reminding itself—and showing the world—that regulation and economic dynamism are not inherently at odds, the bloc can retain its status as a regulatory superpower.
FROM FORBEARANCE TO SURRENDER
How did the EU get to the point of seriously considering giving up its regulatory superpower? Recent pressures from the Trump administration and American tech giants may be tipping the balance, but only because they are exacerbating two long-standing trends in EU politics. For too long, EU officials have been hesitant to enforce their own laws. And they are now also coming to the ill-judged conclusion that these laws and regulations stand in the way of economic growth.
More than two decades ago, in the halls of its Berlaymont headquarters, the European Commission was quietly transforming its approach to enforcement. This new approach, which two of us (Kelemen and Pavone) have labeled “forbearance,” involved the intentional underenforcement of EU laws and regulations.
The EU’s turn to forbearance had nothing to do with external pressures but was instead a response to problems at home. Amid a rising tide of Euroskepticism in the years before the 2008 financial crisis, EU member states increasingly complained about the commission’s vigorous enforcement of regulations. The president of the commission at the time, José Manuel Barroso, became convinced that by relaxing the enforcement of EU rules and adopting a more conciliatory approach, he could win back support from national governments. By reining in the lawyers and bureaucrats who had been suing member governments before the European Court of Justice, the commission began sacrificing its legal role as the “guardian of the treaties” to safeguard its political role as the engine of European integration.
The commission’s relaxation of enforcement had a greater effect than even its advocates anticipated. From 2004 to 2018, the number of cases that the commission brought against member states at the European Court of Justice plunged by 87 percent and have not rebounded since. Strikingly, this decline occurred even while the EU nearly doubled in size and as many governments very publicly failed to comply with EU laws.
By eroding the enforcement of the EU’s high regulatory standards, forbearance already weakened one of the pillars of the Brussels effect. In fields such as consumer and environmental protection, citizens and civil society began to lose confidence in the commission’s resolve to enforce EU standards. If EU regulations are not effectively enforced, foreign companies seeking access to Europe’s lucrative market may also take notice and no longer feel obliged to adjust to meet EU standards, weakening the radiating effect of the EU’s regulatory model across the world.
The EU can revive and strengthen its regulatory powers and their outsized global influence.
Of course, the EU did not give up entirely on enforcing its laws and rules. For instance, in taking on big tech from 2017 to 2024, the EU’s antitrust commissioner, Margrethe Vestager, successfully challenged the anticompetitive business practices of the U.S. tech giants, resulting in almost $10 billion in fines against Google alone. EU Single Market Commissioner Thierry Breton was equally fierce in holding the U.S. tech companies accountable. Together with Vestager, he opened an investigation into violations of EU rules on content moderation by the social media platform X in 2023 under the Digital Services Act. These enforcement actions made the EU a digital empire, writing rules for the global technology industry and keeping the Brussels effect alive.
This resolve in enforcing EU tech regulations may now be fading. Indeed, European Commission President Ursula von der Leyen intervened to push France not to renominate Breton, who had become Elon Musk’s bête noire. Vestager also departed the commission following a poor showing by her Danish Social Liberal Party in the 2024 European elections.
Beyond changes in personnel, another force has worked to suppress the EU’s regulatory prowess: the imperative of competitiveness. The 2024 report titled The Future of European Competitiveness, written by Mario Draghi, the former president of the European Central Bank, proposed a paradigm shift in EU economic policy. The report criticized the damaging effects of EU regulations on innovation and competitiveness, calling for a “regulatory pause.” Von der Leyen embraced this narrative and responded in “a lightning-fast deregulation drive” that blindsided EU insiders. She abandoned some of her signature regulatory initiatives, such as the Green New Deal, and announced a new “Green Industrial Deal,” “Competitiveness Compass,” and five omnibus packages designed to reduce the EU’s regulatory burden by a quarter. Reacting to this sudden policy shift, the European Trade Union Confederation warned of an incoming “bonfire of regulations.” Prominent targets of this deregulation drive include simplifying sustainability reporting and due diligence requirements for businesses, and the shelving of the AI liability directive.
To be sure, the rights-based regulatory model propelling the Brussels effect has its downsides. If the EU overshoots the mark, companies may conclude that the cost of complying with EU standards outweighs the cost of leaving the European market entirely. The Draghi report stressed that 60 percent of European businesses cite regulatory burdens as obstacles to investment. The General Data Protection Regulation has unintentionally entrenched the power of the large tech companies that can afford to comply with its stringent provisions, whereas the compliance costs can be prohibitively high for small firms. The EU’s corporate sustainability reporting can also be burdensome, in particular for smaller companies who faced extensive requirements to gather and analyze data.
Europe can stand as a beacon of stability and the rule of law.
But pitting regulation against competitiveness sets up a false choice. Many other barriers slow innovation and competitiveness in Europe much more than regulations do: the continent’s fragmented digital single market, lack of deep and integrated capital markets, restrictive immigration policies, inflexible labor markets, and risk-averse entrepreneurial culture. All these areas require ambitious policy reforms. But preaching deregulation as a solution to Europe’s competitiveness woes could weaken the EU’s global influence without actually generating the desired economic growth.
These questions and uncertainties have only been magnified by the arrival of the second Trump administration and its assault on the EU’s regulatory powers. For years, the United States has been mounting a pressure campaign on Europe to ease its regulation of U.S. tech giants. A decade ago, President Barack Obama called out European regulators, accusing them of protectionism, but he did not take concrete measures to rein in the EU’s regulatory ambitions. The Biden administration mobilized diplomats to push back on some European regulatory initiatives while embracing others. President Joe Biden warned that the EU’s antitrust policy should not exclusively target American companies while resolutely pursuing the very same tech giants back home under U.S. antitrust laws. Trump, on the other hand, did away with diplomatic niceties and launched an all-out war on the EU’s rights-based regulatory model.
At his inauguration on January 20, Trump seated the CEOs of Apple, Meta, X, and Amazon in the front row, overshadowing his own cabinet picks. Then, in an unprecedented collusion between big tech and U.S. state power, Trump handed Musk the reins of the U.S. government just as the world’s richest man was using his social media platform to prop up the neofascist Alternative for Germany (AfD) party in the German parliamentary elections. Next, Trump dispatched Vance to deliver a fiery speech at the Munich Security Conference attacking the EU’s laws on content moderation that supposedly stifle alternative viewpoints. Vance called these “assaults” on free speech the “threat from within.” Simultaneously, Trump allies in Congress subpoenaed eight U.S. tech giants to turn over evidence of EU “censorship.” Trump dealt the next blow himself in April, acting on his repeatedly voiced resentment toward European tech regulations and other unfair trade practices by slapping tariffs on the EU as part of his global trade war.
In press conferences, EU officials have promised not to bow to the Trump administration’s threats. The commission denied media reports that it is dropping its investigations of Apple, Google, and Meta under the EU’s Digital Services Act. But these affirmations ring hollow. Indeed, the commission seems to already be bending. In its outline of plans for 2025 (its “work programme”), the commission has scrapped draft rules protecting consumer privacy on messaging apps and an AI liability directive aimed at facilitating lawsuits against AI companies. The commission is also delaying the application of a new corporate due diligence law until 2028 and weakening firms’ reporting obligations regarding the compliance of their supply chain with human rights and environmental obligations. The EU is inching closer to relinquishing the Brussels effect.
REVIVING THE BRUSSELS EFFECT
It does not have to be this way. The EU has no need to raise the white flag: it can revive and strengthen its regulatory powers and their outsize global influence.
Rescuing the Brussels effect does not mean giving up on boosting European competitiveness and innovation, as both regulation and tech dynamism are vital to the EU’s long-term strategic autonomy, prosperity, and security. Out of 100 global startups valued at over $1 billion, only eight are headquartered in the EU. Silicon Valley is leaving Europe far behind in artificial intelligence investments, with U.S. companies investing six times more in AI compared with their European counterparts. But shredding EU regulations will not close this gap. Letting Musk write the rules for Europe and not enforcing Europe’s digital regulations will not make the EU a global superpower. Instead of relinquishing its rights-driven regulatory model, the EU should now deploy that same zeal to build other pillars of a thriving tech ecosystem.
The EU should focus its drive for reform on cultivating tech entrepreneurship through completing the digital single market and creating a true capital markets union that would help EU tech companies scale and fund their innovations. It should relax immigration laws that inhibit attracting global talent. And it should harmonize the bankruptcy regimes across member states to make failure less fatal and ensure that European entrepreneurs are given a second chance if they fail. This would encourage them to take risks and pursue more disruptive innovations. Mimicking the American deregulatory model and fueling inequality and oligarchy will not make Europe more attractive, but safeguarding a rights-based regulatory regime and standing up for citizens and consumers will. As the United States retreats from defending fundamental rights and liberal democracy, the EU’s regulatory superpower is more necessary than ever.
The EU should also take advantage of shifting global alliances and the fact that many countries are threatened by both U.S. big tech and the Trump administration. In a world where the United States is turning on its friends, the Brussels effect is part of what makes Europe an appealing partner. For instance, countries including Australia, Brazil, and South Korea have adopted tough approaches to digital regulation modeled on the EU’s. EU protections of the rights of citizens serve as a symbol and a shield against American saber rattling for many people worldwide.
EU officials—those in the commission first and foremost—should heed the appeals of civil society and recommit themselves as “guardians of the treaties.” The EU is enjoying record levels of public support, and its regulations enjoy a strong backing by citizens. The growing European boycott of American goods and services suggests that surrendering to U.S. pressure could trigger a public backlash. Capitulating to Trump’s demands would also only invite fresh demands, as extortionists always come back for more. The collapse of the rules-based international order also makes enforcing the EU’s regulatory standards and rights protections more vital than ever. Faced with geopolitical uncertainty and the specter that “might makes right,” the EU can stand as a beacon of stability and the rule of law. It can reassure the world that, unlike the United States, the EU has not lost sight of where its influence comes from, who its allies are, and where its values lie.
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