For now, the administration is content to free-ride on Brussels’ activism while designating the DMA a barrier to trade on paper and claiming that its hands are tied on digital trade until Congress acts on digital policy. In fact, the administration is not only fine with the EU reining in Big Tech but also more comfortable than it should be with letting Europe set global rules. That explains the administration’s complacency toward serious bipartisan accusations that the president has ceded global economic leadership with his reversal on digital trade policy.

The Consequences for the United States and the Global Economy

Even if Washington no longer seeks to foster the conditions conducive to the expansion of American corporations abroad, the U.S. government should not support foreign governments in curbing American corporate expansion. The EU is going after the most valuable businesses in the U.S. economy, and its targeting of Big Tech in the short run benefits China. The DMA designated only one of its technology titans, ByteDance. Eventually, more Chinese digital platforms will be subject to EU regulations, but by that time, they will have a foothold in the EU market. As for the EU model of governance, there is a reason Europeans “use an American search engine, shop on an American e-commerce site, thumb American phones, and scroll through American social media feeds.” The EU is apparently unwilling or unable to address the need for both innovation and regulation at the same time. 

The U.S. trade representative implies that the administration’s digital reversal does not put America’s global leadership at risk because China’s model of state control over data flows is unappealing to most. Nonetheless, regional digital economy agreements and trade agreements with digital chapters dot the global landscape, but they do not all conform with each other. If trade is resilient to U.S. withdrawal, so is the business of setting the rules and norms governing it. 

The alternative to a global framework for digital rules is a “Splinternet” and balkanized digital trade. All nations would then make things that could only be sold in limited markets abroad. That is a recipe for shrinking, not growing, the middle class. 

Keeping America’s technological edge sharper than its competitors requires constantly running against the best in the business, no matter what corner of the globe they hail from. Ring-fencing American technology companies into the highly regulated, democracies-only global order the administration prefers will incentivize imitation over innovation.   

Unfortunately, the U.S. path is set—regardless of who wins the White House in November. That is the ultimate irony: an approach aimed in part at changing the political climate at home, growing the middle class, and forcing the political marketplace to reward the center rather than the extremes will do the exact opposite. Washington needs to reconsider its direction of travel before the rest of the world makes other plans.

Ferial Ara Saeed is the Founder of Telegraph Strategies LLC, a consulting firm. She has deep experience in economic, foreign policy, and national security issues and expertise in North Asia and the Middle East. A former senior American diplomat, she has advised cabinet and sub-cabinet officials in each of these areas. Follow her on X: @TelStratLLC.

Image: Salma Bashir / Shutterstock.com.