Trump trade war rewires the geo-political importance of Big Tech
Sweeping tariffs imposed by the US on China, Canada, Mexico and potentially the European Union represent a potential rewiring of the global trade order with technologies like AI at the center of the power struggle.
“For better and for worse Donald Trump is a wake-up call on the reality of European freeriding,” said Gregory C. Allen, Director of the Artificial Intelligence Governance Project at the bipartisan, nonprofit policy research Washington-based organization Center for Strategic and International Studies (CSIS) at Mobile World Congress in a keynote addressing the geopolitics of technology. “But there still has to be common ground. Europe cannot be the enemy in a future in which the United States and Europe cooperate effectively. Somehow, we have to come back from that brink.”
A more protectionist world
The is not does just concern defence and military spend or tariffs on raw product like steel but a rift that is opening up between the U.S and the China and the U.S and Europe impacting collaboration and competition on emerging tech like AI and quantum compute.
“We're entering a more protectionist, politicized, and polarized world in which everybody's thinking about diversifying and embracing new opportunities,” said Keyu Jin, Global economist and author, Harvard University. “For every action, there's always a reaction, and there are unintended consequences. Because of Trump 2.0, you can see actually attitudes turning a little bit warmer towards China from the likes of Europe.”
'Anywhere but China'
Pressed on the decoupling of the U.S from China and what that means for technology, Allen said, “We are all used to the pace of exponential progress described by Moore’s law but the progress in AI is greater than that. The fact that AI capability today is useful but not world shattering doesn’t mean that we’re perhaps only a handful of years away from jaw-dropping transformational change. As the U.S looks to future where AI is 10,000 times better than today, they are looking at a future which they don’t want to invite China to.”
He reasoned that the U.S had woken up to the importance of owning the means of semiconductor manufacture on its own shores, and that Trump was only doing to China what China had been doing for decades.
During COVID when supply chain disruptions caused a shortage of semiconductors it cut 2 percent from U.S GDP, he said. “Semiconductors are analogous to oil in terms of the economic dependence on this technology.”
Allen said that China has openly declared its intention to tighten other countries' dependence on China. “If China is not going to become the new Saudi Arabia of oil maybe it can outspend everybody in semiconductor investment and develop a new means of economic coercion. For all the talk about diversification, the most common kind of diversification that I hear about is ‘anywhere but China’.”
President Trump had openly called for decoupling between the United States and China but in the high-tech field, decoupling has been China's policy for quite some time, said Allen.
He pointed to solar panels, electric vehicles and digital media as industries in which “Chinese domestic companies ultimately pushed out foreign suppliers.” Google, Amazon, Microsoft have all had a very tough time in China over decades, he added.
Keyu Jin responded that there’s a “dangerous obsession” in Washington with China that is not reciprocated. “China's internal opportunities, opportunities, and challenges are primarily internal,” she said.
“When tech control sanctions are imposed on China what happens is it mobilizes the entire country from top to bottom from private sector to universities to go after high tech. Technology has been listed as a national priority in China. Just imagine all the money that was spent on importing chips is now redirected to domestic industries because they feel an existential crisis.
She added, “I don’t think any country wants to be at the mercy of another. They don't want to be at the mercy of the U.S. either. We are seeing global fragmentation and regionalism with diversified payment systems going on outside of the core Western economies. The old model of globalization based on efficiency and cost has gone and a new block of economies are emerging to trade with each other.”
These included the Gulf countries, Singapore, Hong Kong, China and Europe, she said. “DC says, ‘We need to stop China’, but in China the question is ‘When will the U.S finally realize that we're not going anywhere’ and that stopping China is not really possible?’”
Europe in the crosshairs
Europe appears to be in the middle of the spat between two super powers. At MWC2025 the FCC chair Brendan Carr had branded the European Commission’s Digital Services Act (DSA), a threat to free speech.
“For US technology companies that do business here, the censorship that is potentially coming down the pipe from the DSA is something that is incompatible with both our free speech tradition in America and the commitments that these technology companies have made through diversity of opinions,” Carr said.
The EU’s AI Act which is now in force further threatens to pit U.S Big Tech against European consumer guardrails. Allen thinks there will be compromise. “Donald Trump likens himself as the ultimate deal maker but I don't think there's any deal you're going to make with Europe where Europe agrees that Europe is the enemy. That's just not going to work for them.
“A deal that could be reached is acknowledging the reality of European freeriding. You now hear openly from senior European leaders that when it comes to defense and security, they have been free riding on the Americans, benefiting without incurring and sharing the costs.”
Jerry Sheehan, Director, Directorate for Science, Technology & Innovation, OECD pointed to AI, quantum computing, immersive technologies and 6G networks as well as synthetic biology as bleeding edge tech with significant implications for economic growth and prosperity. “In the new geopolitical environment these technologies are vital for economic security and since they also have defense applications, there's a national security concern too.”
He said, “All tech businesses should be paying close attention to what's happening in the geopolitical space because it is changing the alignments. Knowing the benefits and risks of operating in particular regions changes the calculus of how companies should think about their value chains and investments.”
The revelation that Chinese developer DeepSeek had apparently achieved similar algorithmic success to OpenAI but at a fraction of the cost “shows that China had world class teams doing legitimate innovation,” admitted Allen.
He dismissed the idea that China was now leading in AI, arguing that U.S developers were now adopting similar methods. “DeepSeek has been transformative for the moral of Chinese tech ecosystem. That is unambiguous. Whether that is warranted it is real. They are moving forward and feeling like they have momentum again.”
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