1 00:00:00,240 --> 00:00:07,200 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,440 --> 00:00:13,440 Speaker 2: So far, President Trump has waged a pretty conventional trade war. 3 00:00:14,040 --> 00:00:16,759 Speaker 3: Since the start of his second term, President Trump's push 4 00:00:16,800 --> 00:00:20,720 Speaker 3: to reshape global trade has been chaotic. The presidents announced 5 00:00:20,720 --> 00:00:23,920 Speaker 3: big tariff deals he said would bring in trillions of dollars, 6 00:00:24,239 --> 00:00:27,240 Speaker 3: and he's had to deal with a major setback decision. 7 00:00:27,240 --> 00:00:30,320 Speaker 3: The Supreme Court has struck down President Trump's tariffs, healing 8 00:00:30,320 --> 00:00:33,360 Speaker 3: a huge blow to his economic agenda. Brendan Murray is 9 00:00:33,400 --> 00:00:36,360 Speaker 3: Bloomberg's Global Trade editor, and he calls this a pretty 10 00:00:36,360 --> 00:00:39,800 Speaker 3: conventional trade war because of what Trump has targeted. 11 00:00:39,960 --> 00:00:43,159 Speaker 2: He has put tariffs on physical goods that we use 12 00:00:43,159 --> 00:00:44,959 Speaker 2: in our everyday life that he thinks should be made 13 00:00:45,000 --> 00:00:46,680 Speaker 2: in the US, rather than a broad. 14 00:00:46,479 --> 00:00:50,199 Speaker 3: Goods like cars and pharmaceuticals. But the President's trade war 15 00:00:50,360 --> 00:00:52,600 Speaker 3: is about to get a lot less conventional. 16 00:00:52,960 --> 00:00:56,280 Speaker 2: So there's a whole nother section of trade economists would 17 00:00:56,320 --> 00:01:00,920 Speaker 2: refer to as services trade. These are banking services and services, 18 00:01:01,240 --> 00:01:04,520 Speaker 2: legal services, and the like. But there's this growing subset 19 00:01:04,640 --> 00:01:08,240 Speaker 2: known as digital services that count as trade that is 20 00:01:08,280 --> 00:01:11,240 Speaker 2: the fastest growing part of trade overall. 21 00:01:11,720 --> 00:01:16,440 Speaker 3: It also includes social media, digital advertising, and streaming Brendan 22 00:01:16,480 --> 00:01:19,800 Speaker 3: says cross border sales of digital services are growing twice 23 00:01:19,840 --> 00:01:22,400 Speaker 3: as fast as more traditional goods. He says they now 24 00:01:22,440 --> 00:01:25,840 Speaker 3: make up about fifteen percent of global trade, and last 25 00:01:25,959 --> 00:01:29,080 Speaker 3: year the value of global exports of services delivered digitally 26 00:01:29,440 --> 00:01:33,440 Speaker 3: increased to more than four point five trillion dollars. That's 27 00:01:33,440 --> 00:01:36,720 Speaker 3: a number Brennan says will continue to rise as AI 28 00:01:37,000 --> 00:01:41,479 Speaker 3: becomes more prevalent. So far, digital services have not been 29 00:01:41,520 --> 00:01:44,759 Speaker 3: covered by traditional trade rules and regulations, and the US 30 00:01:45,040 --> 00:01:47,680 Speaker 3: has tried to keep it that way. It's pushback on 31 00:01:47,760 --> 00:01:50,560 Speaker 3: countries that have threatened to impose taxes and tariffs on 32 00:01:50,600 --> 00:01:53,640 Speaker 3: digital services from tech companies that are based in the US, 33 00:01:53,960 --> 00:01:56,280 Speaker 3: including Alphabet and Apple and x. 34 00:01:56,680 --> 00:02:01,960 Speaker 2: There are discussions and disagreements about whether those services, those 35 00:02:02,040 --> 00:02:04,560 Speaker 2: things that we buy and sell on our phones and 36 00:02:04,560 --> 00:02:07,919 Speaker 2: our laptops, will become the next frontier of the trade 37 00:02:07,960 --> 00:02:10,280 Speaker 2: wars that President Trump is waging around the world. 38 00:02:10,760 --> 00:02:13,679 Speaker 3: That battle is getting started on a couple fronts. We 39 00:02:13,760 --> 00:02:16,880 Speaker 3: have a new Section three I one investigation. This week, 40 00:02:16,919 --> 00:02:19,320 Speaker 3: Trump and his trade team started to lay the groundwork 41 00:02:19,400 --> 00:02:23,079 Speaker 3: for a new teriff regime, one that could penalize countries 42 00:02:23,120 --> 00:02:24,919 Speaker 3: that tax US digital services. 43 00:02:25,160 --> 00:02:27,840 Speaker 2: This Section three zero one authority will allow the US 44 00:02:27,919 --> 00:02:31,400 Speaker 2: Trade Representative to impose tariffs not just on goods, but 45 00:02:31,520 --> 00:02:34,520 Speaker 2: also go after services and investment that it feels are 46 00:02:34,520 --> 00:02:37,040 Speaker 2: being treated unfairly in foreign markets. 47 00:02:37,600 --> 00:02:40,680 Speaker 3: And in less than two weeks, the World Trade Organization 48 00:02:40,800 --> 00:02:43,840 Speaker 3: will hold its next meeting, where global leaders will have 49 00:02:43,919 --> 00:02:46,720 Speaker 3: the chance to turn the tables on Trump's efforts. 50 00:02:47,040 --> 00:02:49,240 Speaker 2: So some of them will go along, but others may 51 00:02:49,240 --> 00:02:51,320 Speaker 2: see it as an opportunity to hit back with some 52 00:02:51,360 --> 00:02:52,680 Speaker 2: protectionism of their own. 53 00:02:59,200 --> 00:03:01,040 Speaker 3: I'm David Gerreh and this is the big take from 54 00:03:01,040 --> 00:03:04,120 Speaker 3: Bloomberg News Today. On the show, the next front in 55 00:03:04,200 --> 00:03:08,079 Speaker 3: President Trump's trade war is online. A looming battle over 56 00:03:08,160 --> 00:03:11,360 Speaker 3: digital services could put the president on the defensive what 57 00:03:11,360 --> 00:03:13,400 Speaker 3: it could mean for the price of an ebook and 58 00:03:13,520 --> 00:03:22,040 Speaker 3: the operations of US tech giants. For the last three decades, 59 00:03:22,120 --> 00:03:25,440 Speaker 3: the world's major economies have decided, without a lot of fanfare, 60 00:03:25,840 --> 00:03:27,840 Speaker 3: not to put tariffs on e commerce. 61 00:03:28,160 --> 00:03:30,520 Speaker 2: We didn't know back in nineteen ninety eight that these 62 00:03:30,960 --> 00:03:33,640 Speaker 2: kinds of services were going to dominate our lives, but 63 00:03:33,800 --> 00:03:37,280 Speaker 2: now they are, and the WTO is trying to deal 64 00:03:37,320 --> 00:03:37,520 Speaker 2: with it. 65 00:03:37,600 --> 00:03:40,520 Speaker 3: Bloomberg's Brennan Murray says, that Ever since, the World Trade 66 00:03:40,600 --> 00:03:43,960 Speaker 3: Organization has been kicking the question of digital services tariffs 67 00:03:44,240 --> 00:03:48,200 Speaker 3: down the road using something called the moratorium on customs 68 00:03:48,280 --> 00:03:50,080 Speaker 3: duties on Electronic transmission. 69 00:03:50,280 --> 00:03:54,000 Speaker 2: That moratorium has been renewed every two years, basically with 70 00:03:54,160 --> 00:03:58,120 Speaker 2: few headlines. The idea was that if e commerce reaches 71 00:03:58,360 --> 00:04:03,320 Speaker 2: poor countries rich countries, we all benefit from the proliferation 72 00:04:03,400 --> 00:04:04,160 Speaker 2: of e commerce. 73 00:04:04,520 --> 00:04:07,560 Speaker 3: But as digital services become a bigger and more lucrative 74 00:04:07,600 --> 00:04:10,560 Speaker 3: part of the global economy and our daily lives, the 75 00:04:10,600 --> 00:04:12,720 Speaker 3: future of that moratorium is up in the air. 76 00:04:13,080 --> 00:04:16,520 Speaker 2: At the last meeting two years ago, the agreement was 77 00:04:16,760 --> 00:04:20,359 Speaker 2: will extend it one more time, but then it expires. 78 00:04:20,640 --> 00:04:23,359 Speaker 2: So the agreement that the members of the World Trade 79 00:04:23,440 --> 00:04:27,920 Speaker 2: Organization came to was that this was going to sunset period. 80 00:04:28,279 --> 00:04:31,280 Speaker 3: Representatives of the WTOS one hundred and sixty six member 81 00:04:31,320 --> 00:04:34,760 Speaker 3: countries will debate it when they gather in Cameroon later 82 00:04:34,800 --> 00:04:35,239 Speaker 3: this month. 83 00:04:35,800 --> 00:04:39,839 Speaker 2: How do we factor in that all of these goods 84 00:04:39,880 --> 00:04:47,160 Speaker 2: and services are increasingly moving across borders invisibly on subse cables, 85 00:04:47,320 --> 00:04:51,360 Speaker 2: and there's no customs checkpoint on the subse cable that 86 00:04:51,600 --> 00:04:55,719 Speaker 2: connects the European Union and the United States. What they're 87 00:04:55,760 --> 00:04:58,200 Speaker 2: trying to do at the WTO is figure out a 88 00:04:58,240 --> 00:05:02,120 Speaker 2: way to head off these kinds of disputes, to measure 89 00:05:02,240 --> 00:05:05,960 Speaker 2: digital trade and to come to some consensus as to 90 00:05:06,040 --> 00:05:10,520 Speaker 2: how countries should treat it as a subset of trade. 91 00:05:10,760 --> 00:05:12,719 Speaker 2: It used to be, you know, a company would have 92 00:05:12,760 --> 00:05:15,520 Speaker 2: a physical presence in a market that it operated in, 93 00:05:15,880 --> 00:05:18,760 Speaker 2: But that doesn't have to be the case anymore. I 94 00:05:18,800 --> 00:05:22,760 Speaker 2: have a Venmo account on my phone, and Venmo is 95 00:05:22,800 --> 00:05:26,320 Speaker 2: based in New York City, and I'm based in the UK, 96 00:05:26,640 --> 00:05:29,240 Speaker 2: and I can send birthday gifts to my nieces and 97 00:05:29,279 --> 00:05:32,720 Speaker 2: nephews through Venmo. I don't need a Bank of America 98 00:05:32,760 --> 00:05:34,919 Speaker 2: branch here in the UK to make a transaction like 99 00:05:34,960 --> 00:05:38,240 Speaker 2: that anymore. So if you are one of these companies 100 00:05:38,640 --> 00:05:41,320 Speaker 2: and you are trying to operate in a country like 101 00:05:41,440 --> 00:05:44,839 Speaker 2: France or Spain that have these digital services taxes on 102 00:05:45,040 --> 00:05:48,159 Speaker 2: the revenue, then it gets very difficult to apply the 103 00:05:48,160 --> 00:05:51,800 Speaker 2: same business model in one country as opposed to other 104 00:05:51,800 --> 00:05:55,279 Speaker 2: countries where the rules and regulations and taxes may not 105 00:05:55,400 --> 00:05:57,279 Speaker 2: be existent at all. 106 00:05:57,360 --> 00:05:59,920 Speaker 3: What the US wants is to make that moratorium I 107 00:06:00,120 --> 00:06:04,240 Speaker 3: duties on digital services permanent, but Brennan says that will 108 00:06:04,279 --> 00:06:06,160 Speaker 3: be a tough sell to other countries. 109 00:06:06,360 --> 00:06:10,680 Speaker 2: There are countries like Indonesia, like India, like Brazil, like 110 00:06:10,760 --> 00:06:13,599 Speaker 2: South Africa that see this as a way to raise 111 00:06:13,640 --> 00:06:16,039 Speaker 2: a lot of money, and they see the big US 112 00:06:16,080 --> 00:06:19,080 Speaker 2: tech companies making a lot of money in their countries. 113 00:06:19,520 --> 00:06:23,680 Speaker 2: And Indonesia actually has a tariff line in its customs 114 00:06:23,720 --> 00:06:28,280 Speaker 2: code for digital transactions. It's currently zero, but all they 115 00:06:28,320 --> 00:06:30,680 Speaker 2: have to do is to change that to twenty percent. 116 00:06:31,279 --> 00:06:34,479 Speaker 2: And the ebook that you download in Bali just became 117 00:06:34,520 --> 00:06:40,280 Speaker 2: twenty percent more expensive. But recently, as the US administrations 118 00:06:40,320 --> 00:06:44,520 Speaker 2: from Biden through Trump have become more protectionist in the 119 00:06:44,520 --> 00:06:48,960 Speaker 2: way they approach the US's trade balance with the world, 120 00:06:49,160 --> 00:06:52,480 Speaker 2: those countries on the receiving ends of those digital services 121 00:06:52,520 --> 00:06:56,640 Speaker 2: imports are saying, hey, you can't be protectionists with your 122 00:06:56,680 --> 00:07:00,080 Speaker 2: imports and free traders with your exports. And some of 123 00:07:00,120 --> 00:07:03,279 Speaker 2: these trade deals that President Trump has signed with these 124 00:07:03,320 --> 00:07:07,040 Speaker 2: countries have a provision in then that says you must 125 00:07:07,520 --> 00:07:11,160 Speaker 2: support a permanent moratorium on electronic transmissions. 126 00:07:11,320 --> 00:07:13,320 Speaker 3: I'm lingering on something you just said, which is, if 127 00:07:13,360 --> 00:07:16,160 Speaker 3: you took a trip and downloaded any book that could 128 00:07:16,200 --> 00:07:19,600 Speaker 3: be subject to attacks, can you play that out a 129 00:07:19,600 --> 00:07:21,080 Speaker 3: bit more like, how big a deal would it be 130 00:07:21,080 --> 00:07:22,560 Speaker 3: if we saw that moratorium end. 131 00:07:23,240 --> 00:07:25,720 Speaker 2: Well, this is the real difficulty in how do you 132 00:07:26,160 --> 00:07:30,040 Speaker 2: identify that book that you just downloaded? Where did it 133 00:07:30,360 --> 00:07:35,040 Speaker 2: cross from an Amazon hub where it exists to the 134 00:07:35,080 --> 00:07:37,600 Speaker 2: beach where you want to read the book. The digital 135 00:07:37,600 --> 00:07:42,360 Speaker 2: services trade globally is about five trillion dollars, and so 136 00:07:42,960 --> 00:07:44,920 Speaker 2: we're talking about a lot of money and a lot 137 00:07:44,960 --> 00:07:50,200 Speaker 2: of potential for countries, particularly developing countries see dollar signs. 138 00:07:50,280 --> 00:07:55,040 Speaker 2: And many of them have budgetary problems, fiscal deficits that 139 00:07:55,080 --> 00:07:58,000 Speaker 2: they need to address, and so this is one of 140 00:07:58,040 --> 00:07:59,760 Speaker 2: the main ways that they would look to do that. 141 00:08:01,360 --> 00:08:03,320 Speaker 2: So the US has a lot of work to do 142 00:08:03,800 --> 00:08:08,440 Speaker 2: to convince countries to agree to either extend the moratorium 143 00:08:08,960 --> 00:08:13,400 Speaker 2: or push it aside completely. And the US has not 144 00:08:13,480 --> 00:08:15,040 Speaker 2: made a lot of friends over the last year or 145 00:08:15,080 --> 00:08:18,320 Speaker 2: so in the world of trade. They've applied tariffs to 146 00:08:18,600 --> 00:08:20,880 Speaker 2: a lot of countries that would sit on the other 147 00:08:20,960 --> 00:08:25,280 Speaker 2: side of the US, countries like India. So we'll see 148 00:08:25,360 --> 00:08:28,440 Speaker 2: how willing those countries are to go along with the US. 149 00:08:28,960 --> 00:08:32,000 Speaker 3: Brendan does the rise of AI can change the conversation 150 00:08:32,040 --> 00:08:34,719 Speaker 3: at the WTO about digital services or maybe add to 151 00:08:34,760 --> 00:08:35,400 Speaker 3: its urgency. 152 00:08:35,960 --> 00:08:39,120 Speaker 2: Well, the big issue for the WTO when it comes 153 00:08:39,160 --> 00:08:44,800 Speaker 2: to digital services and AI is what they call data sovereignty. 154 00:08:45,320 --> 00:08:47,880 Speaker 2: All of those data centers that we see being built 155 00:08:48,280 --> 00:08:51,720 Speaker 2: from the UK to the US to pretty much every 156 00:08:52,280 --> 00:08:56,280 Speaker 2: major economy are seeing this huge boom and data centers. 157 00:08:56,679 --> 00:09:01,080 Speaker 2: The question becomes whose data is that? Just say, for example, 158 00:09:01,160 --> 00:09:05,600 Speaker 2: you have a large tractor manufacturing company that's based in Ohio, 159 00:09:06,040 --> 00:09:09,840 Speaker 2: and that tractor company sells its products all over the world, 160 00:09:10,400 --> 00:09:15,600 Speaker 2: and that tractor company has data embedded in those pieces 161 00:09:15,600 --> 00:09:19,560 Speaker 2: of machinery that collect all sorts of information from soil 162 00:09:19,640 --> 00:09:23,760 Speaker 2: moisture to the temperature outside. So if that tractor is 163 00:09:23,800 --> 00:09:29,120 Speaker 2: sold in Brazil and it's beaming its data into a 164 00:09:29,200 --> 00:09:33,040 Speaker 2: data center in Brazil, whose data is that. Is that 165 00:09:33,080 --> 00:09:37,319 Speaker 2: the American company's data or is it the Brazilian governments data? 166 00:09:37,840 --> 00:09:43,120 Speaker 2: It becomes very valuable to know how well Brazilian farmers 167 00:09:43,200 --> 00:09:45,320 Speaker 2: crops are going to be that year. So that would 168 00:09:45,360 --> 00:09:49,240 Speaker 2: be important information that could be sold to another company, 169 00:09:49,240 --> 00:09:52,240 Speaker 2: a fertilizer company. This is where the rubber meets the 170 00:09:52,320 --> 00:09:57,040 Speaker 2: road with the data sovereignty issue. Is everything we use nowadays. 171 00:09:57,080 --> 00:10:00,760 Speaker 2: Modern electronics are just collecting all sorts of data and 172 00:10:00,920 --> 00:10:04,640 Speaker 2: where that data is physically located is becoming a big 173 00:10:04,679 --> 00:10:05,440 Speaker 2: source of debate. 174 00:10:05,800 --> 00:10:06,839 Speaker 3: The upper meets the soil. 175 00:10:07,040 --> 00:10:08,600 Speaker 2: In effect, it means that I was going to. 176 00:10:08,640 --> 00:10:13,760 Speaker 3: Jug when we come back the years long clash between 177 00:10:13,760 --> 00:10:17,000 Speaker 3: the US and Europe on taxing and regulating big tech 178 00:10:17,360 --> 00:10:20,120 Speaker 3: and how meta alphabet and X have been caught in 179 00:10:20,120 --> 00:10:31,760 Speaker 3: the middle. The EU has gone after some of the 180 00:10:31,760 --> 00:10:33,800 Speaker 3: biggest US tech giants. 181 00:10:33,400 --> 00:10:37,280 Speaker 2: Seeking aim at he speech, disinformation, and other harmful content. 182 00:10:37,440 --> 00:10:41,000 Speaker 3: Armline Union have fined Apple the equivalent of about two 183 00:10:41,160 --> 00:10:44,040 Speaker 3: billion dollars or dismissed an appeal from Google over a 184 00:10:44,080 --> 00:10:46,679 Speaker 3: two point eight billion dollar fine against the company by 185 00:10:46,679 --> 00:10:50,160 Speaker 3: the Europe. As big US tech companies have become global giants, 186 00:10:50,480 --> 00:10:53,920 Speaker 3: EU regulators have brought some high profile actions against them. 187 00:10:54,240 --> 00:10:57,559 Speaker 2: The US would say the euro over regulating our companies, 188 00:10:57,880 --> 00:11:00,160 Speaker 2: and the Europeans would say, well, we want to protect 189 00:11:00,160 --> 00:11:03,239 Speaker 2: our citizens and our businesses against harmful practices. 190 00:11:03,480 --> 00:11:06,880 Speaker 3: Bloomberg's Trade editor Brendan Murray says what these cases expose 191 00:11:07,240 --> 00:11:11,040 Speaker 3: is of philosophical divide between Europe and the United States. 192 00:11:10,840 --> 00:11:14,120 Speaker 2: And this is where the real flare ups are starting 193 00:11:14,160 --> 00:11:17,080 Speaker 2: to happen. They're sort of smaller brushfires at the moment, 194 00:11:17,480 --> 00:11:21,440 Speaker 2: but this is where digital services could become a much 195 00:11:21,480 --> 00:11:24,439 Speaker 2: more volatile place for trade wars to erupt. 196 00:11:24,720 --> 00:11:28,000 Speaker 3: He says. The tensions over digital services are deeply rooted 197 00:11:28,120 --> 00:11:31,320 Speaker 3: and what he calls competing models, different views of what 198 00:11:31,360 --> 00:11:33,480 Speaker 3: the Internet was and what it could become. 199 00:11:33,800 --> 00:11:37,800 Speaker 2: The Internet was going to democratize the world if you believed, 200 00:11:38,240 --> 00:11:40,960 Speaker 2: you know, some officials back in the early two thousands, 201 00:11:41,200 --> 00:11:44,120 Speaker 2: that this was going to bring China into the fold 202 00:11:44,480 --> 00:11:48,920 Speaker 2: out from behind it's sort of protected economy. But what 203 00:11:48,960 --> 00:11:51,800 Speaker 2: we really ended up with is three basic models of 204 00:11:51,800 --> 00:11:52,440 Speaker 2: the Internet. 205 00:11:53,640 --> 00:11:55,440 Speaker 3: The first is the US model. 206 00:11:55,640 --> 00:11:59,560 Speaker 2: This one that the US espouses the Trump administration the 207 00:11:59,559 --> 00:12:02,720 Speaker 2: Biden administration to a lesser degree. That says it should 208 00:12:02,720 --> 00:12:06,680 Speaker 2: be for free speech, free commerce, and unimpeded by government 209 00:12:06,720 --> 00:12:08,160 Speaker 2: regulations for the most part. 210 00:12:08,400 --> 00:12:12,599 Speaker 3: Second, Brendan says, is the European model, which is more regulated. 211 00:12:12,880 --> 00:12:17,680 Speaker 2: The Europeans are concerned about safety, particularly among young people. 212 00:12:18,040 --> 00:12:22,840 Speaker 2: They're concerned about anti competitive practices, and they're also concerned 213 00:12:22,880 --> 00:12:26,440 Speaker 2: about privacy protections much more so than the US model. 214 00:12:26,600 --> 00:12:29,280 Speaker 3: And the third model is what Brendan calls the pure 215 00:12:29,360 --> 00:12:30,520 Speaker 3: authoritarian model. 216 00:12:30,640 --> 00:12:33,720 Speaker 2: The Chinese, the Russians, and to some extent we've seen 217 00:12:33,760 --> 00:12:37,160 Speaker 2: it with the situation in Iran where some protests start 218 00:12:37,200 --> 00:12:41,160 Speaker 2: to happen and the Internet goes off. So we basically 219 00:12:41,320 --> 00:12:44,560 Speaker 2: have these three competing models, and one of them is 220 00:12:44,600 --> 00:12:48,360 Speaker 2: going to rule out at some point, and at the moment, 221 00:12:48,760 --> 00:12:52,160 Speaker 2: the battle is really between the US and the European models. 222 00:12:53,840 --> 00:12:56,760 Speaker 2: It all goes down to free speech. Free speeches in 223 00:12:56,800 --> 00:13:00,079 Speaker 2: the US constitution, and there are very few limits on 224 00:13:00,240 --> 00:13:04,560 Speaker 2: free speech. Those same kinds of freedoms are not embedded 225 00:13:04,760 --> 00:13:08,160 Speaker 2: in the European democracies. You know, there are restrictions on 226 00:13:08,240 --> 00:13:11,920 Speaker 2: hate speech. And so there's just a fundamental difference between 227 00:13:12,360 --> 00:13:16,240 Speaker 2: the way the US views social media e commerce and 228 00:13:16,320 --> 00:13:19,680 Speaker 2: the way the Europeans look at it, which is much 229 00:13:19,720 --> 00:13:23,400 Speaker 2: more of a It needs oversight, otherwise it will erode 230 00:13:23,400 --> 00:13:26,079 Speaker 2: your democracy rather than build it up. 231 00:13:26,440 --> 00:13:29,360 Speaker 3: How has Europe been at enforcing these regulations. 232 00:13:29,720 --> 00:13:33,880 Speaker 2: They have targeted about twenty US companies. They've hit them 233 00:13:33,920 --> 00:13:39,200 Speaker 2: with fines over content that violated the European rules. Most 234 00:13:39,240 --> 00:13:42,319 Speaker 2: of those twenties have been the big tech companies based 235 00:13:42,360 --> 00:13:46,200 Speaker 2: in the US, companies like Meta Google. Those are the 236 00:13:46,200 --> 00:13:49,920 Speaker 2: ones that the Europeans really feel are crossing the line. 237 00:13:50,880 --> 00:13:54,320 Speaker 3: The EU brought its latest landmark case in December against 238 00:13:54,360 --> 00:13:58,040 Speaker 3: Elon Musk's X, issued a fine of one hundreds twenty 239 00:13:58,240 --> 00:13:59,600 Speaker 3: million euro to. 240 00:14:00,400 --> 00:14:02,400 Speaker 1: For breaching the Digital Services Act. 241 00:14:02,800 --> 00:14:05,480 Speaker 2: This is the first ever find under the DSA. 242 00:14:05,559 --> 00:14:09,080 Speaker 3: The DSA Digital Services Act is one of several European 243 00:14:09,080 --> 00:14:12,800 Speaker 3: regulations of big tech. The European Commission faulted X for 244 00:14:12,920 --> 00:14:16,760 Speaker 3: not being transparent enough on multiple counts, including how it 245 00:14:16,840 --> 00:14:19,560 Speaker 3: decides which accounts on the social media platform get a 246 00:14:19,680 --> 00:14:23,960 Speaker 3: verified check mark. Anyone can pay to obtain the verified status, 247 00:14:24,440 --> 00:14:28,400 Speaker 3: and X does not meaningfully verify who is behind it. 248 00:14:28,800 --> 00:14:31,600 Speaker 3: X appealed that decision about a month ago. Officials in 249 00:14:31,640 --> 00:14:35,840 Speaker 3: the US also objected. The US Trade representative Jamison Greer 250 00:14:36,160 --> 00:14:38,200 Speaker 3: called Europe's decision draconian. 251 00:14:38,520 --> 00:14:41,440 Speaker 1: This is the equivalent of California setting the emission rules 252 00:14:41,440 --> 00:14:43,240 Speaker 1: for cars for the whole country. Right for what they 253 00:14:43,280 --> 00:14:45,240 Speaker 1: do right, The EU was essentially trying to do it 254 00:14:46,320 --> 00:14:48,320 Speaker 1: for global digital operators, and it would be one thing 255 00:14:48,360 --> 00:14:48,960 Speaker 1: if they so. 256 00:14:49,280 --> 00:14:52,360 Speaker 2: President Trump has taken up their arguments to a large 257 00:14:52,400 --> 00:14:57,800 Speaker 2: extent and has threatened Europe more broadly, the European Union 258 00:14:58,160 --> 00:15:02,040 Speaker 2: with tariffs, even though the fines and the regulations and 259 00:15:02,560 --> 00:15:05,640 Speaker 2: the taxes may be done at the country level rather 260 00:15:05,680 --> 00:15:07,160 Speaker 2: than the European Union level. 261 00:15:07,400 --> 00:15:10,040 Speaker 3: Given what seems like the wideness of disagreement among the 262 00:15:10,160 --> 00:15:13,440 Speaker 3: US and Europe, what is this fight likely to be like? 263 00:15:13,640 --> 00:15:16,600 Speaker 2: It's hard to see how the two sides are fundamentally 264 00:15:16,640 --> 00:15:19,560 Speaker 2: going to get together and come out with some agreement. 265 00:15:20,320 --> 00:15:24,080 Speaker 2: The European Union is divided into twenty seven different countries. 266 00:15:24,360 --> 00:15:28,720 Speaker 2: They all set fiscal policy tax policy individually that's not 267 00:15:28,800 --> 00:15:32,640 Speaker 2: governed at the European Union level in Brussels, and so 268 00:15:32,800 --> 00:15:34,960 Speaker 2: it's hard to see how the EU is going to 269 00:15:35,000 --> 00:15:38,480 Speaker 2: come up with a unified approach that will satisfy the 270 00:15:38,480 --> 00:15:42,200 Speaker 2: demands from the US government at the moment. So it 271 00:15:42,360 --> 00:15:46,560 Speaker 2: seems like we're headed for some sort of showdown where 272 00:15:47,400 --> 00:15:51,080 Speaker 2: the US is putting all these demands on the Europeans 273 00:15:51,120 --> 00:15:54,120 Speaker 2: and the Europeans are saying this is a sovereignty issue 274 00:15:54,160 --> 00:15:57,200 Speaker 2: for US. This isn't up for discussion. It's not leverage 275 00:15:57,200 --> 00:16:00,080 Speaker 2: that we can use in a trade negotiation. This is 276 00:16:00,120 --> 00:16:03,800 Speaker 2: how we collect revenue to pay for our government. And 277 00:16:04,080 --> 00:16:08,600 Speaker 2: President Trump has often complained about the Europeans how big 278 00:16:08,680 --> 00:16:13,640 Speaker 2: the trade deficit is with the European Union economy broadly, 279 00:16:14,200 --> 00:16:18,360 Speaker 2: but the US has a surplus of services exports digital 280 00:16:18,400 --> 00:16:22,880 Speaker 2: services exports to the European Union, and so if you 281 00:16:22,920 --> 00:16:26,640 Speaker 2: separate the two, then the Europeans could make the same 282 00:16:26,720 --> 00:16:29,600 Speaker 2: case that, look, we have a big services deficit with 283 00:16:29,640 --> 00:16:31,840 Speaker 2: the US, and therefore we need to we need to 284 00:16:31,880 --> 00:16:34,880 Speaker 2: remedy the situation. So until the two sides can kind 285 00:16:34,880 --> 00:16:39,720 Speaker 2: of reconcile those two ways of looking at things, then 286 00:16:39,880 --> 00:16:42,240 Speaker 2: I think we're going to be at a stalemate at 287 00:16:42,240 --> 00:16:45,600 Speaker 2: the very least, and perhaps there could be some sort 288 00:16:45,640 --> 00:16:49,760 Speaker 2: of more offensive measures that both sides could launch at 289 00:16:49,800 --> 00:16:54,680 Speaker 2: each other. The services arena is really going to be 290 00:16:54,800 --> 00:16:58,280 Speaker 2: where the trade wars of the future are fought. It's 291 00:16:58,400 --> 00:17:01,440 Speaker 2: very hard to game out right now exactly what the 292 00:17:01,480 --> 00:17:04,000 Speaker 2: weapons are going to be, whether they would be tariffs 293 00:17:04,080 --> 00:17:07,280 Speaker 2: or taxes or regulation. But we're in the digital age, 294 00:17:07,320 --> 00:17:09,600 Speaker 2: and the trade wars of the future are going to 295 00:17:09,640 --> 00:17:11,440 Speaker 2: be waged in the digital arena. 296 00:17:16,240 --> 00:17:18,600 Speaker 3: This is the Big Take from Bloomberg News. I'm David Gura. 297 00:17:18,840 --> 00:17:21,320 Speaker 3: The show is hosted by me, Sarah Holder, and wanha. 298 00:17:21,800 --> 00:17:25,000 Speaker 3: The show is made by Aaron Edwards, David Fox, Jeff Grocott, Eleanor, 299 00:17:25,040 --> 00:17:28,920 Speaker 3: Harrison Dengate, Patty Hirsch, Rachel Lewis, Chrisky, Katie mcmurrain, Naomi 300 00:17:29,280 --> 00:17:33,520 Speaker 3: Julia Press, Tracy Samuelson, Naomi Shaven, Alex Segurra, Julia Weaver, 301 00:17:33,800 --> 00:17:37,120 Speaker 3: Young Young and Taka Yauzawa. There's much more on Bloomberg 302 00:17:37,160 --> 00:17:40,160 Speaker 3: dot com. Get unlimited access to all of our coverage 303 00:17:40,240 --> 00:17:42,920 Speaker 3: at a special rate for listeners at Bloomberg dot Com 304 00:17:42,960 --> 00:17:49,280 Speaker 3: Slash Podcast offer. Thanks for listening. We'll be back on Monday.