Issue #3 - July 31, 2025

EU and US reach a tariff deal - with the US imposing a one-way agreement on technology investments

After a few months of intense back and forth, a trade deal was signed on Monday, July 28. Most EU exports to the US would face a 15% tariff, instead of the 30% recently suggested by D. Trump. The EU has pledged to buy $750bn worth of US energy products, including gas, oil and nuclear fuel from the US, as well as investing $600bn into the US economy. Exports of US chips will face no tariffs.

While a trade war has been largely avoided thanks to the deal, the EU will now have to re-focus on its own industrial strategy that will have to include direct investments in the US economy which could further complicate the capacity of the bloc to build its own industrial autonomy and incentives to buy European. Wolfgang Niedermark, a member of the board of the BDI, a leading German trade organisation, has blamed the EU's poor competitiveness as the main reason for failing to negotiate a better trade deal with the US. Political reactions in Member States to the deal have been quite chilling, with German Chancellor Merz saying the trade deal will cause 'significant damage' to the German economy, and French PM Bayrou qualifying the deal as a "dark day" for the EU.

But can the EU break from US tech supremacy?

A long read in the FT last week has provoked many comments on LinkedIn over whether the EU is doomed when it comes to the global tech race. Now a trade deal has been signed with the US that requires the EU to invest and buy American, the EU will now need to be even more creative to identify ways to put its economy first. The FT article points out the current limits of EU tech players to compete with their US counterparts.

One of the most challenging issues for the EU is to incentivise the purchase of EU technology without distorting the rules of free commerce. According to the FT, "The bloc has already announced it wants EU governments to exclude foreign bidders in public procurement tenders in its forthcoming public procurement directive, which the bloc's commissioner for prosperity and industrial strategy Stéphane Séjourné has dubbed a 'Buy European Act'". There is not yet confirmation of the scope but the current French Minister of Economy has said that "Buy European" clauses should be applied to critical industries, adding that for him "cloud data centres, especially server infrastructure, is such a critical industry". The newly signed EU/US trade deal might further complicate an industrial strategy that would start with promoting EU purchasing, since it may be considered by the US as disregarding the trade deal.

The AI Act gets further support from US tech players but concerns remain

After the EC has published the Code of Practice on GPAI (as mentioned in the previous newsletter), Meta reacted a few days later stating it won't sign the code and declared the EU wasn't going in the right direction on AI. Even though the trade association CCIA said it disagreed with the code too, some of its powerful members have over the past few days lined up to announce they would nonetheless sign it. Among them, Google and Microsoft.

The devil is in the details though. Google has signed while also raising concerns over trade secrets, copyright, and potential slow processes, raising the flag about the Code risking "slowing Europe's development and deployment of AI". On its side, Musk's xAI will sign only the "safety chapter" of the Code, and not the sections that include copyright measures. Signatories will be publicly listed by the EC on August 1. The Code was published July 10, 2025, with obligations taking effect August 2, 2025. Signing the Code offers companies an opportunity to publicly support the policy agenda of the EU, but can also help building compliance capabilities. Not signing signals political disagreement, but the enforcement of the AI Act remains the same for all players providing services to the EU market.

What I have been reading

Is the US ready for the next war - The New Yorker - July 21, 2025

In this very long read, Dexter Filkins assesses the evolution of warfare, with the emergence of drones and AI, and how Ukraine and Israel have been leveraging these technologies recently. He shows how the Founder of Oculus is creating a defense company that aims at positioning the US at the right tech level to anticipate future conflicts. His description of a simulation of a potential US/China conflict over Taiwan, the potential casualties, and velocity of escalation is quite chilling.

La folle histoire des Très riches heures du Duc de Berry - Beaux Arts Magazine (In French) - July 3, 2025

If you are travelling in France and near Paris over the summer, an absolutely fantastic exhibition is taking place, until October 5, in Château de Chantilly that exhibits one of the most stunning books of the Middle Ages. It took more than 100 years to draft and decorate this book. Commissioned by Duc de Berry, an influential French philanthropist, the book collects a unique iconography that is said to have even influenced Disney studios for Sleeping Beauty.