A New Path in U.S.–EU Trade

Trade talks often get boiled down to tariffs—but what’s happening between the U.S. and the European Union right now goes much deeper. With a major tariff deadline looming on July 9, both sides are moving quickly toward a deal. But instead of starting with duties and dollar signs, they’re beginning with the less flashy but highly consequential barriers that live in the background—digital rules, climate regulations, and shared industrial standards. These are called nontariff trade barriers, and they’re often what companies struggle with most.

A draft deal now on the table would pause or delay several of these friction points. Among the key elements: a temporary suspension of enforcement of the EU’s Digital Markets Act (DMA) for U.S. tech giants; a one-year delay on Europe’s new deforestation compliance rules; and limited exemptions from carbon border taxes and methane-related regulations. The agreement also lays groundwork for cooperative policies in shipbuilding, defense procurement, and the critical minerals sector, potentially opening the door to more stable market access and coordinated standards between allies.

All of this matters, even if it’s not as attention-grabbing as steel tariffs or retaliatory duties. These measures could ease pressure on companies navigating different regulatory systems and reduce the kind of compliance chaos that stalls innovation and trade. But it’s what the digital rules pause represents that’s particularly worth digging into.

The EU’s Digital Markets Act was designed to regulate "gatekeeper" tech platforms, pushing back on behaviors like self-preferencing and data hoarding. But it’s also caused concern, especially for companies based outside Europe. A pause in enforcement gives both sides time—not just to negotiate the finer points of tech governance, but to build a shared understanding of how digital markets should work. For U.S. startups looking to expand into Europe, this delay could be the difference between being able to compete or being locked out by complexity and legal risk.

This pause isn’t just a technical adjustment—it’s a trust-building gesture. It signals that the U.S. and EU are willing to talk instead of escalating. It shows a shift toward surgical, collaborative trade diplomacy rather than tit-for-tat retaliation. And it reflects a growing awareness that digital regulation can’t happen in isolation. As both regions grapple with AI oversight, data governance, and tech competition, this moment offers a window to align approaches before divergent rules calcify into conflict.

Still, the draft deal leaves one big thing unresolved: tariffs. The baseline 10% duties from the Trump era, along with targeted steel and auto tariffs, remain in place. Worse, a new round of retaliatory tariffs—potentially up to 50%—could hit soon if no broader agreement is reached. These weren’t included in the current draft, likely to avoid bogging down immediate progress. But the absence is felt. Without a clear roadmap on duties, this nontariff-first deal is a beginning, not an endpoint.

Some EU members are also skeptical, warning against moving too quickly or giving up leverage before tariffs are addressed. Others see the logic: get quick wins where cooperation is possible, and build momentum from there. It’s a calculated risk, but one that might avoid a larger clash.

So what’s really going on here is strategic. The U.S. and EU are clearing underbrush before trying to plant a more durable forest. Tackling the regulatory weeds—digital laws, carbon compliance, industrial standards—gives businesses space to breathe and lays the foundation for deeper economic alignment. But until tariffs are either frozen or resolved, the shadow of disruption remains.

In that sense, the digital pause might be the most revealing piece of all. It’s not just about tech—it’s about trust, timing, and whether global trade in 2025 can be governed by cooperation rather than collision. Whether this agreement becomes a turning point or just a temporary truce will depend on what happens after July 9.