Much has been said about the so-called “Brussels Effect”—that is, the European Union’s animating conceit that its mission is to make rules for the entire world. Without irony, the EU has embraced the meme that others innovate, while the EU regulates.
Recent shifts in U.S. trade policy have introduced the threat of tariffs against jurisdictions that adopt such far-reaching regulatory regimes to target U.S. firms, particularly the tech giants, in what we might call the “Washington Effect.”
The just-announced trade deal between the United States and the European Union, however, reveals a more complex picture. While the EU agreed to abandon network fees as a part of the agreement, it is officially signaling defiance on its core digital regulations.
This raises a fundamental question: can the Washington Effect truly succeed when EU bureaucrats’ identity depends on maintaining their regulatory empire? Or would even limited success demonstrate that external pressure is the only force capable of breaking the cozy relationships between EU officials and entrenched interests that harm Europeans as consumers, workers, and innovators?
The Network Fees Capitulation
The White House fact sheet announcing the U.S.-EU trade deal contains a single sentence that marks a watershed moment in EU digital policy: “the European Union confirms that it will not adopt or maintain network usage fees.” This explicit commitment represents an apparent final burial of what I’ve previously described as nothing more than special pleading from incumbent telecom operators.
What were these “network fees”? The proposal—marketed as a “fair share” contribution—would have required large providers of online content (mostly U.S. platforms like Netflix, Google, and Meta) to pay European telecom operators based on traffic volumes. The telecoms claimed they needed €174 billion by 2030 to meet their connectivity targets and argued that companies generating heavy traffic should compensate them for network usage.
This was economically illiterate. As I argued in 2023, internet traffic is ultimately generated by consumers, who already pay for internet access. The proposal amounted to double taxation, wrapped in the rhetoric of “fairness.” It would have raised consumer prices and potentially slowed network upgrades by reducing competitive pressure on telecom operators. Even the Body of European Regulators for Electronic Communications (BEREC), the EU’s own body of telecom regulators, opposed the plan.
Yet despite overwhelming opposition from stakeholders, member states, and independent experts, it took the credible threat of 30% tariffs from Washington to kill this zombie proposal. This demonstrates how U.S. pressure can deliver clear benefits to European consumers by breaking through entrenched special interests and their connections to EU officials—exemplified by former Commissioner Thierry Breton, whose background as a telecom executive surely had nothing to do with his enthusiasm for forcing American companies to subsidize his former industry colleagues.
‘Addressing Unjustified Digital Trade Barriers’
The same White House announcement pledges that “the United States and the European Union intend to address unjustified digital trade barriers.” This carefully chosen language opens the door to challenging the EU’s entire framework of digital regulations.
According to Euro News, U.S. negotiators proposed creating a new advisory body that would give American companies subject to the Digital Markets Act (DMA) a formal voice in the regulatory process. While EU officials publicly denied any such committee is under consideration—with European Commission spokesperson Thomas Regnier insisting that “our legislation is not on the table”—the mere fact that such proposals are being floated demonstrates how far the conversation has shifted.
This represents a fundamental challenge to Brussels’ cherished regulatory “sovereignty.”
The DSA as ‘Foreign Censorship’
The Digital Services Act (DSA) faces its own reckoning. A July 2025 interim staff report from the U.S. House Judiciary Committee framed the DSA as a “foreign censorship threat” that compels “global censorship and infringes on American free speech.”
The committee’s investigation, which included issuing subpoenas to nine technology companies, found that European regulators are targeting core political speech that, in the United States, would be protected under the First Amendment. At a May 2025 DSA workshop, the European Commission reportedly categorized the phrase “we need to take back our country” as “illegal hate speech.” The Commission also asked platforms how they could use “content moderation processes” to address memes that might spread “hate speech or discriminatory ideologies.”
These findings provide ammunition for the Trump administration’s Feb. 21 memorandum directing federal agencies to investigate EU policies that “undermine free speech.” When Thierry Breton threatened regulatory action against X.com for broadcasting a live interview with President Donald Trump in August 2024, it crystallized American concerns that the DSA represents extraterritorial censorship, rather than legitimate content moderation.
The report provides damning examples of politically motivated censorship requests from EU member states:
- Poland’s National Research Institute (NASK) flagged a TikTok post stating that “electric cars are neither an ecological nor an economical solution.”
- French national police directed X.com to remove a satirical post from a U.S.-based account commenting on French immigration policies following a terrorist attack.
- German authorities classified a tweet calling for the deportation of a Syrian family reported to have committed 110 criminal offenses as “incitement to hatred.”
Moreover, the DSA requires platforms to prioritize censorship requests from government-approved “trusted flaggers”—entities the report argues are often pro-censorship and, in some cases, government-funded. The DSA’s ostensibly “voluntary” codes of conduct on hate speech and disinformation are effectively mandatory, as compliance serves as a safe harbor against DSA enforcement.
The penalties reinforce these concerns: fines of up to 6% of global revenue create what the Judiciary Committee report called a strong incentive for platforms to over-censor, affecting users globally, as major social-media platforms typically maintain a single set of terms and conditions worldwide.
The Brussels Bureaucracy Strikes Back
Yet here is where the Washington Effect has met with Brussels intransigence. According to Politico, “there is absolutely no commitment on digital regulation, nor on digital taxes” in the U.S.-EU trade deal. In an editorial, Politico opined that the Commission had “called the Trump administration’s bluff” on its attempt to bend EU rules.
The Economic Times quoted Regnier declaring on behalf of the Commission: “The legislations will not be changed. The DMA and the DSA are not on the table in the trade negotiations with the U.S.” Regnier continued: “We are not going to adjust the implementation of our legislation based on the actions of third countries. If we started to do that, then we would have to do it with numerous third countries.”
A Deal with Two Interpretations
What happens next is far from clear. The United States and European Union are signaling different understandings of what their new deal means. While Washington speaks of “addressing unjustified digital trade barriers,” Brussels insists its digital regulations aren’t even on the table. This ambiguity may be deliberate, as it allows both sides to claim victory while postponing the real confrontation.
But can Brussels truly maintain its current course? The capitulation on network fees proves that sustained pressure works when combined with internal opposition. The Computer & Communications Industry Association (CCIA) has estimated that EU digital rules cost $97.6 billion annually—a staggering burden that harms not just American companies but, more importantly, Europe itself. While the Commission clings to the DMA and DSA as monuments to its relevance, European innovation falls further behind.
Will the Washington Effect Ultimately Prevail?
As shown in the about-face on network fees, sustained American pressure can work when combined with internal EU opposition. The question is whether the Trump administration will maintain focus on digital regulations or move on to other priorities.
Several factors could strengthen the Washington Effect over time. While European companies struggle with 110% service barriers (per the Draghi Report), American competitors burdened by EU regulations may simply focus on other markets, leaving Europe further behind. Moreover, Sweden’s call to pause AI Act implementation hints at growing internal dissent. If major member states break ranks, Brussels’ united front crumbles.
The congressional framing of the DSA as “foreign censorship” may provide grounds for stronger challenges in the United States that could escalate beyond trade negotiations. Also, the striking evidence that the Judiciary Committee uncovered may become crucial for legal challenges to the legislation before EU courts.
For those of us hoping the Washington Effect would force a regulatory reckoning, the deal offers both encouragement and disappointment. Yes, sustained pressure can kill the most egregious proposals. But core regulations that embody bureaucratic identity and power prove remarkably resistant to economic logic.
Perhaps the real question isn’t whether the Washington Effect will succeed, but whether Europeans will eventually tire of paying the price for their bureaucrats’ regulatory fantasies.
The Washington Effect may not achieve immediate victory over Brussels’ intransigence. But by forcing these contradictions into the open, it performs a valuable service. As Europeans watch their continent fall further behind technologically, they should ask whether the Brussels Effect’s conceit is really worth the cost.
