The European Union (EU) is mulling bruising penalties against Big Tech following President Donald Trump’s decision to impose 20% tariffs against Europe on Wednesday — including a “big bazooka” option that could blow a hole in revenue.
The bloc’s secret weapon is the Anti-Coercion Instrument (ACI), which could impose back-breaking economic sanctions on U.S.-based companies within Europe. Enacted in 2023, ACI places market limitations on service companies, particularly in tech.
“It’s called the big bazooka,” Fabrizio Pagani, a partner at the investment bank Vitale, told DealBook. “I personally think the big bazooka should be used first of all as a deterrent. So put it on the table, and let’s negotiate.”
Equally troubling, the EU has the power to suspend intellectual property rights and exclude companies from public procurement contracts under its Enforcement Regulation. This could include a ban on Elon Musk’s Starlink satellite network from winning government contracts. Officials in Italy are alreadyย rethinking plans to acquire the system.
France, meanwhile, is pushing for the EU to hit American tech companies with penalties.
“The Americans think that they are the ones with escalation dominance [in the trade war], but we also have the ability to do that,” an EU diplomat told the Financial Times.
“The EU is coming after U.S. companies in new ways from a retaliatory perspective,” Zeta Global CEO David Steinberg said in an interview. “This methodology has created an animosity that will ricochet across American companies in Europe.”
For now, the pain is being felt on Wall Street, where Big Tech stocks were pummeled Thursday. Shares of Dell Inc. (19%), HP Inc. (15%), Amazon.com Inc. (9%), Meta Platforms Inc. (9%), and NVIDIA Corp. (8%) plunged.
Massive tariffs on Vietnam (46%), Thailand (36%), India (26%) and Malaysia (24%) are pulverizing Apple Inc., which diversified manufacturing operations to those countries from China. Apple’s stock plummeted 9% in trading Thursday.
“Apple produces basically all their iPhones in China and the question will be around exceptions/exemptions on this tariff policy if those companies are building more operations/factories/plants in the U.S. like Apple announced in February,” Wedbush Securities analyst Dan Ives said in a note to investors on Wednesday. “For Nvidia and other chip players with significant exposure to China and Taiwan supply chains, the worry will be around pricing and margin impacts along with what this means for the global supply chain looking forward.”
“We believe [Apple CEO Tim] Cook and Apple executives themselves are staring at this tariff chart wondering what is next and that is the agita for investors,” Ives wrote Thursday. He warned of iPhones starting at $3,500 if produced entirely in the U.S.
The impact of Trump tariffs extend beyond economics. They could enforce, and might even step up, technology trends around artificial intelligence (AI) and automation, industry experts point out.
“The tariffs will accelerate trends we’re already seeing. Tech companies that provide automation and AI solutions will thrive as manufacturers seek efficiencies to offset higher costs,” Shama Hyder, CEO of Zen Media, said in an email. “We’ve already seen this playbook work. After previous tariff actions, major manufacturers pivoted to establishing U.S. facilities rather than simply passing costs to consumers.”
“What’s fascinating is how this disruption will separate visionary leaders from those just riding previous waves,” Hyder added. “The winners will be companies that leverage this moment to differentiate through innovation while competitors are stuck complaining about changed market conditions. The digital landscape has always rewarded adaptability over stability. These tariffs simply add urgency to transformations that were already inevitable.”
Oumi CEO Manos Koukoumidis argues open source offers a critical strategic advantage that will help the U.S. maintain leadership in tech and AI in a geo-climate of escalating trade tensions. “If the U.S. is serious about retaining its leadership in AI, investing in and supporting truly open-source models and platforms is essential, as they can thrive regardless of trade wars,” he said in an email.
Kevin Stevens, a partner atย venture-capital firm Energize Capital, sees a potential positive opportunity for European businesses.
“As a result of tariffs marking up the costs of goods tied to hardware and infrastructure, European companies are starting to rely on existing domestic strengths or those emerging from geographies that are more trade-friendly than the U.S. at this time,” Stevens said in an email. “What we’re seeing is an increase in European self-sufficiency, which could be a good thing for their economies, as the upward trend in European public equities would indicate.”
