When the European Union and the United States struck a trade framework in the summer of 2025, it was sold as a truce — an ugly but workable deal that capped a tariff war before it could spiral. A year on, the truce is holding on paper and fraying almost everywhere else.
The core bargain still stands. Washington imposes a 15% tariff on most European goods, including cars and pharmaceuticals. In return, the EU agreed to drop tariffs on American industrial exports, offer preferential terms on some farm and seafood products, and commit to $750 billion in US energy purchases and $600 billion in investment by 2028. For a bloc that had faced threats of 30% duties and worse, 15% counted as damage control.
The trouble is what the framework deliberately did not cover: digital services taxes and the EU’s digital rulebook. Those omissions were papered over in 2025. In 2026 they are the fight.
Washington has said any country that taxes US technology companies through a digital services levy will face an immediate 100% tariff on its exports to the United States. The threat is aimed squarely at European capitals weighing national digital taxes — and at Brussels’ broader regulatory architecture. Meanwhile the EU has kept enforcing that architecture: it upheld an €890 million fine against Google under the Digital Markets Act, and the Commission recently accepted a compliance plan from X under the Digital Services Act after finding the platform in breach. Every one of those actions lands on an American company, and Washington reads them as trade barriers by another name.
Then came the move nobody in Brussels saw coming. In late July, the US Treasury intervened to prop up a sliding yen — but instead of selling dollars, which might have undercut Washington’s strong-dollar posture, it sold euros from its own reserves. The European Central Bank was told only after the transactions were done; ECB President Christine Lagarde and US Treasury Secretary Scott Bessent spoke on 1 August, after the fact.
Senior ECB officials called it a break from decades of trans-Atlantic coordination, in which allied central banks consulted one another before moving currency markets. Using Europe’s currency as the instrument to defend Japan’s, without warning, turned a monetary operation into a political one. It signalled that the EU’s reserves and its currency are, in Washington’s current mood, fair game.
The tariff threat is not idle either. US officials have opened a fresh set of trade investigations using a patchwork of older statutes, any of which could produce new duties on European exports without reopening the headline deal. The 15% ceiling, in other words, is a floor for the arguments, not a settlement of them.
The 2025 framework bought calm by leaving the hardest questions unanswered, and those questions have not gone away — they have compounded. Digital taxation, Big Tech enforcement and now currency intervention are all versions of the same underlying dispute: whether Europe can regulate, tax and manage its own economy without US retaliation. A 15% tariff is a number both sides can live with. Sovereignty is not so easily split down the middle. The truce will probably survive the year, because neither side wants the alternative. But it is being tested at more points than it was built to withstand, and each new front makes the next one easier to open.
