EUR/USD Alert: US-EU Trade War Risks Re-Emerge Over Tech Regulation

Political Risk: A brewing dispute over digital sovereignty threatens to spill over into the real economy, creating distinct downside risks for the Euro (EUR).

The European Union has issued a €120 million fine against the US-based X platform (formerly Twitter) under its Digital Services Act (DSA), citing “deceptive” verification practices and lack of transparency. This regulatory action has triggered a sharp response from Washington.

From Tech to Tariffs

The White House has tied the digital dispute directly to traditional trade levers. Commerce Secretary Lutnick indicated that the US could reinstate or maintain high tariffs on European steel and aluminum if the EU does not adjust its “punitive” digital regulations.

• The Mechanism: The US views the EU's DSA and DMA (Digital Markets Act) as non-tariff barriers targeting American tech dominance.
• The Consequence: Retaliatory tariffs on EU industrial goods would hit the Eurozone's manufacturing core (particularly Germany) at a time of economic fragility.

Forex Implication: The correlation between trade tension headlines and EUR/USD weakness is likely to strengthen. If the US moves from threats to actual tariff implementation, the Euro could face renewed selling pressure against the Dollar.