Last week, US President Donald Trump made the latest in a string of recent threats to hit Europe with more tariffs for its approach to regulating the world’s biggest tech companies.
Writing on his Truth Social account on 5 September, Trump said the the European Commission’s decision to issue Google with a $3.5 billion anti-trust fine for anti-competitive behaviour in advertising and search was a “very unfair” penalty against “American ingenuity”, before threatening to issue retaliatory tariffs to “nullify” the fines being charged to US tech companies by the EU.
Trump’s latest threat comes just over two weeks after the US Federal Trade Commission chair Andrew Ferguson wrote a letter to US Big Tech firms telling them not to apply Europe’s Digital Services Act regulations — the bloc’s cornerstone 2022 tech regulation package designed to protect citizens’ rights online, increase transparency in advertising and promote fair competition between companies — if it threatens the “freedom of Americans”.
Why does it matter?
The US administration’s threats risk jeopardising the US-EU trade deal that was reached this summer, which was already widely criticised by European politicians, commentators and citizens damaging Europe in favour of the US. Under the deal, the EU has accepted a 15 per cent tariff on most of its exports to the US, while US-made goods bound for the EU are exempt from duties. This compares to low-single-digit or no duties on EU exports to the US before Trump started his second term. But EU officials said it was the best deal they could get to avoid escalating tensions with Trump and a full-blown trade war.
Even if the new threats don’t turn into action, brands are already grappling with a severely fragmented regulatory landscape when it comes to AI, after the US administration announced it was all but deregulating Big Tech companies to advance AI development in the US. While the EU has been criticised for bowing to Trump in several areas during the recent tariffs negotiations, it has historically taken its tech regulation sovereignty extremely seriously. This has translated to a more cautious approach than the US, prioritising trust, consumer rights, accountability and fair competition between companies — even if it slows down innovation and increases compliance costs.
This approach is exemplified by the Google fine in question. The European Commission issued Google the $3.5 billion penalty on Friday after a four-year investigation into its dominance in the advertising tech industry. Alongside the fine, the trade bloc ordered Google to end its practice of an alleged “self-preferencing” of its own search advertising services and to introduce measures to stop its anti-competitive behaviour in the adtech space within the next 60 days. Google has appealed the complaint, which was brought to the EU by European publishers, whose own business models are threatened by the Big Tech company’s AI search updates.
What does this mean for fashion?
Fashion brands with operations and stores spanning continents were already facing a complex situation, attempting to comply with Europe’s detailed regulation while charting their own course in the US.
“Fashion brands could face major digital fragmentation and operating headaches as EU and UK laws require platforms to implement region-specific content moderation and privacy controls,” says Lauren Madonia, Lvlup Legal business and intellectual property attorney.
These controls directly affect marketing plans, as the tech platforms that brands and advertisers rely upon to sell their products may have to operate completely differently in each market to satisfy conflicting regulations. A luxury brand’s Instagram campaign could face different content standards, targeting options, tracking and measurement, depending on where users are located, Madonia flags.
“This added complexity could undermine retargeting campaigns that typically drive repeat purchases,” she says. This could force fashion brands to diversify their advertising approaches and explore alternative customer acquisition methods in markets like Europe that could face more limited platform functionality.
Increased fragmentation could also see brands using Meta Business Manager or Google Analytics for global tracking ending up with scattered data that’s harder to compare; customer service through Whatsapp Business could work differently depending on local encryption rules; and customer data could become trickier to manage across borders. “Shoppers travelling from New York to London could lose the personalised recommendations that brands have worked so hard to provide,” Madonia says.
As brands race to invest in AI tools that promise to fix online shopping’s discovery and personalisation pain points, increased regulatory fragmentation poses a fundamental threat to the way these AI models work, too. They typically process customer data across borders, but brands could be forced to run separate systems for US versus EU customers. “This would reduce accuracy and could devastate companies whose entire business depends on AI-powered recommendations,” says Madonia.
And in the unlikely case that Europe did cave to Trump and weaken its regulation of US tech platforms, this could offer larger brands that handle more data more benefits than smaller brands. But these benefits would likely be short lived.
“It would be much easier to target audiences effectively, which could also accelerate the development and deployment of AI tools across design, trend forecasting, inventory management and personalised marketing,” says Venesa Rugova, senior analyst at geopolitical intelligence firm Minerva Technology Futures. “But companies that fail to self-regulate and navigate the balance themselves risk damaging their hard-won credibility with European consumers, which could push them back towards traditional, in-person shopping channels.”
Beyond the most obvious risks to brands’ supply chains posed by the ongoing tariffs uncertainty, tech tariffs could also introduce risks to how brands move goods around the world.
“Fashion brands depend on cloud platforms to track materials from factories to stores, but export restrictions on tech infrastructure could cut off that real-time visibility,” Madonia says. “This hits hardest for brands focused on sustainability reporting or those running tight manufacturing schedules.”
How should brands approach the tech tariff threat?
Fashion brands operating globally are now faced with a double dose of uncertainty, as the renewed tech policy tensions pile on top of the unresolved trade negotiations influencing broader tariffs.
Experts agree this means brands should plan for multiple scenarios, rather than betting on one outcome. In the first instance, brands should audit their digital infrastructure dependencies and focus on “long-term de-risking from the US tech stack, particularly in Europe”, Rugova says.
This means diversifying platform relationships away from just the large US tech players, and developing contingency plans for service fragmentation.
“Alternatives include building direct customer relationships to reduce platform dependency and establishing separate operational frameworks for different regulatory environments,” Madonia says.
A brand faced with a fragmented Instagram campaign in the US and Europe may explore how it can reach European consumers through more in-person pop-ups surrounding a launch, for example.
But while the results of ongoing negotiations remain unclear, experts say careful policy monitoring and de-risking are non-negotiables for global fashion brands — and tech stack de-risking is as important as supply chain de-risking in the wider tariffs debate.
“Those that fail to track these developments risk being blindsided by sudden policy shifts that could significantly disrupt their operations,” Rugova says.
Comments, questions or feedback? Email us at feedback@voguebusiness.com.
