The United States and Europe confront a common challenge: staying ahead of China in the global innovation race. But the US has moved far ahead in key digital technologies while Europe lags.
The Trump administration recognizes the key role of technology for geopolitical competition. It has made US global leadership on tech and artificial intelligence a core pillar of its national security agenda — most recently in the AI Action Plan. As the US doubles down on tech innovation, Europe risks not just lagging in the short term, but stagnating for the long term.
European decline is not in the US national security interest. The continent remains far and away the US’s largest trade partner, with $1.3 trillion in goods moving across the Atlantic Ocean in 2023, almost 40% more than US trade with China. US investment in Europe and European investment in the US run into the trillions. The US needs a prosperous Europe — its large market, investment, innovation, and talent — to compete with China. US companies benefit from access to the continent’s 450 million consumers, key to the US trade surplus of $71.1 billion in services.
As digital services make up an ever-growing portion of this unparalleled economic partnership, a Europe that lags in tech innovation will be neither economically competitive nor a good trade partner. If Europe can take the hard and necessary steps to accelerate its competitiveness in tech to complement areas where the US lead is already far ahead, it will be a stronger partner to the United States. Growing divergence, however, will only benefit Beijing’s global ambitions to create and control the global tech infrastructure. Going it alone, for either the US or Europe, is simply too high a risk for both.
Europe still has much to offer to the US. European companies will not compete directly with the US on scale, but European researchers and innovators have made significant technological breakthroughs that have benefited US tech growth. A Danish software engineer built Google’s Chrome browser engine, while a Hungarian engineer created Microsoft Office. European talent invented video communications. European companies and research institutes dominate lithography imagery, which is needed to make the most sophisticated semiconductors. Quantum computing? Europeans lead the quantum efforts for several major US players.
Make Good Deals
Below are a few key challenges on which Brussels and Washington can quickly find common ground.
1. Agree on AI Export Controls
The US has to restore trust that it will not pull a “kill switch” and block transfers of cutting-edge tech to Europe. President Trump’s AI Action Plan goes some way to addressing these concerns. It promotes export to allies but also calls for better export control enforcement on crucial components. The US wishes to “align protection measures globally. These measures should be managed in a way that allows all European countries to continue to benefit from US tech.
Europe, in turn, should prioritize the adoption of a unified export control framework for critical and emerging technologies. Under present rules, Brussels can only advise national governments, leading to long, drawn-out negotiations and inconsistent implementation. End-user controls should be harmonized, creating a single Europe-wide control list of technologies.
2. Keep Data Flowing
“Good” rules and existing agreements should be kept, notably the transatlantic Data Privacy Framework, which allows seamless transfer of private data across the Atlantic Ocean. That road to agreement was long and painful. Europe’s highest court has ruled the framework is “adequate” and data transfers can continue. Both sides should refrain from any legislative changes that might undermine the framework and fight to maintain it if it is challenged again. The free flow of data across the Atlantic Ocean is fundamental to the Trump administration’s goals of AI innovation and strong economic security. The current framework provides legal certainty not just for tech, but for other critical sectors such as finance, health care, and hospitality.
3. Align on AI Standards
President Trump’s AI Action Plan is “opportunity first.” AI holds tremendous potential for good, and Americans and Europeans agree that it presents risks. The transatlantic allies should work together. The AI Action Plan, which calls to export to allies and to “align protection measures globally,” can help.
At the same time, access to both European and US AI ecosystems must be scrutinized for national security risks. Many Western companies continue to conduct AI research in China and Russia, and academic collaboration continues with limited constraints, posing ongoing, serious research security risks.
The National Institute of Standards and Technology’s Center for AI Standards and Innovation should cooperate with European peers. The Trump administration emphasizes innovation and competitiveness. Without compromising its ambitions to develop safe, ethical AI, Europe should adapt its implementation strategy for the AI Act to ensure the right tools are in place to enable smooth, effective compliance.
4. Partner on Quantum
Europe and the US are investing billions in quantum computing, a paradigm-shifting technology. Quantum will unlock solutions to present unsolvable problems, such as drug development and fusion energy. Quantum could also undermine present encryption security.
Although the US is ahead with private-sector funding, Europe ranks second only to China in public quantum investment, with nearly €7.7 billion committed. Quantum facilities in Finland, France, and the Netherlands are first class.