A Transatlantic Tech Partnership

The United States and China each view technology leadership, particularly in artificial intelligence (AI), as a core national interest. Washington’s AI Action Plan calls for maintaining “unquestioned and unchallenged global technological dominance”. Beijing’s industrial policy has already catapulted its electric vehicle (EV) and renewable energy sectors to global scale, and it also aims to achieve AI leadership by 2030. 

Amid these competing ambitions, Europe has strengthened its pursuit of technological sovereignty. The continent has technology relationships with both countries, but its sovereignty debate, which gained steam in the last year, is largely focused on US dependencies. A study commissioned by the European Parliament found that US firms hold leading positions in almost every layer of the technology stack. The 2024 Draghi report on competitiveness determined that the EU depends on countries outside the bloc for 80% of its digital products, services, infrastructure, and intellectual property, a conclusion that the European Parliament has confirmed.  

Brussels has reason to be concerned. The Trump administration has used, or threatened to use, trade tools such as tariffs and investigations to pressure the EU to revise its digital regulation. US sanctions applied to International Criminal Court judges have already cut them off from access to American digital tools by restricting their use of credit cards, financial services, Amazon Prime, and email. Washington’s policies toward Ukraine and Greenland have further reinforced Europe's vulnerability on security matters, which are increasingly dependent on technology.  

The administration frames its approach not as one targeted at Europe but one that is part of a broader global strategy to accelerate American tech competitiveness. Washington notes that any country pursuing an “EU-style strategy” to “restrict, limit, and deter the competitiveness of U.S. service providers through discriminatory means” risks similar treatment. Whether through its “tech prosperity deals” with partners such as Japan, South Korea, and the United Kingdom, its Pax Silica initiative, or its AI Export strategy, the United States understands that, when it comes to technology, it needs allies. The Supreme Court’s recent ruling on tariff authority has complicated aspects of this agenda, particularly those concerning elements of agreements, such as the US-UK tech prosperity deal, that are linked to prior negotiations on tariffs. But the underlying US strategic logic remains intact. As White House Director of Science and Technology Policy Michael Kratsios recently stated, “Complete technological self-containment is unrealistic for any country, because the AI stack is incredibly complex. But strategic autonomy alongside rapid AI adoption is achievable, and it is a necessity for independent nations. America wants to help.” 

In this sense, Europe and the United States have long been talking past one another, even before the first Trump administration. But if left unaddressed, the current transatlantic technology conversation risks undermining the competitiveness of both sides. Washington’s increasingly coercive, norms-bending approach toward allies regarding tariffs, NATO, and recent statements on Greenland, are eroding trust in the United States and by extension its technology firms. Washington’s approach also threatens to weaken its ability to compete with Beijing and risks intensifying a European sovereignty debate that conflates the United States and China as equivalent threats. 

As political uncertainty grows on both sides of the Atlantic, this article joins others in arguing that Europe and the United States stand to benefit from deep, carefully managed technological interdependence. It advances three main points. First, it argues that fragmenting the transatlantic technology stack would be economically costly and strategically self-defeating for both sides. Second, it notes that the United States and China are not interchangeable risks. The two countries operate under fundamentally different political and legal systems, a distinction that matters for Europe’s sovereignty debate. Third, it urges that Europe and the United States, rather than retreating from interdependence, should build a framework for managed interdependence and then manage it deliberately and proactively. 

The Strategic Costs of Fragmenting the Transatlantic Tech Stack 

Europe and the United States are bound together by deeply integrated technology markets, research ecosystems, and industrial supply chains. Reversing that integration through broad de-risking or outright decoupling would be politically difficult and economically and strategically prohibitive. Europe’s pursuit of tech sovereignty could entail costs upwards of €4 trillion at precisely the moment when it is also attempting to rearm. Moreover, the only practical short-term substitutes for US technology at scale are overwhelmingly from China, which would present much more serious long-term resilience and security risks. 

The United States is also dependent on European firms. German lasers and Dutch lithography equipment are indispensable to the production of American-designed advanced chips, including the graphics processing units (GPUs) that underpin the American AI sector. In telecommunications, Ericsson and Nokia constitute the only large-scale, trusted alternatives to Chinese 5G suppliers except for South Korea’s Samsung. Reliance on these companies is especially pronounced in the US market, where these two European firms dominate radio access network equipment. 

Fragmenting the transatlantic technology stack could impose large costs by forcing the United States and Europe to redirect investment toward recreating capabilities that already exist on the other side of the Atlantic rather than toward cutting-edge emerging technologies. More importantly, fragmentation could shrink the scale that leading firms rely on to reinvest in research and development and, in turn, credibly compete with China’s state-backed technology ecosystem. 

The Structural Differences in US and Chinese Technology Power 

The way in which the United States engages Europe on technology shapes the latter’s broader strategic orientation, particularly toward China. Uncertainty and instability in the transatlantic relationship risk pushing Europe’s policymakers to hedge, which may be one reason for the EU’s recent openness to World Trade Organization-compatible arrangements on Chinese EV imports. At the same time, Europeans’ views of the United States have deteriorated considerably, with only 16% of them saying in a European Council on Foreign Relations poll that they consider the country to be a reliable ally. The shift in perception is blurring public and policymaker understanding of the profound structural differences between Washington and Beijing. Concerns about external dependence on a rival or adversary are being applied to both despite their very different political and legal systems. 

American firms, however, operate in a pluralistic political economy in which private companies, civil society, and subnational governments routinely challenge federal authority. US entities have a track record of challenging government authority in court. Google, citing corporate policy to resist “improper or overbroad” subpoenas, has challenged an administrative subpoena issued by the Department of Homeland Security seeking to obtain information on a user. Microsoft has said it would sue the US government if ordered to suspend its European cloud operations. Apple shareholders have fought Trump’s calls to cease diversity, equity, and inclusion programs. Private companies also have little incentive to comply with some extreme measures, such as denying access to cloud services, since they would entail financial losses and undermine efforts to promote the global adoption of technologies developed in the United States. 

China-based technology firms, however, operate under a fundamentally different system. Under the country’s 2017 National Intelligence Law, companies and individuals are legally obliged to “support, assist, and cooperate with national intelligence efforts”. These include turning data over to the state upon request. The United States offers multiple independent channels to contest government demands, but in China there are few, if any, meaningful avenues to formally challenge the state’s authority to instrumentalize private companies and individuals. GMF Technology research shows that as firms headquartered in China further penetrate global technology ecosystems, their legal obligation increasingly risks exposing data and the control of sensitive systems to the party-state. Their participation in Beijing’s ongoing economic coercion, industrial espionage, and cyber campaigns, therefore, is not a matter of corporate discretion but a legal requirement. Communist party structures embedded within Chinese corporate governance also blur the public–private boundary in a way that differs from the relationship between the public and corporate sectors in the United States. 

A New Starting Point: Managed Interdependence 

Technological interdependence can create vulnerabilities, particularly in strategically sensitive sectors. The relevant policy issue is not whether to eliminate interdependence but how to manage it. Governments must decide which technologies require a level of sovereign control, which can be safely sourced from trusted partners, and which remain substitutable. Making those choices explicit strengthens supply-chain resilience and reduces the risk that interdependence becomes a source of geopolitical friction. 

Clear signaling on this front can also enable firms on both sides of the Atlantic to align strategies with public priorities so that independent European capabilities can be achieved through jointly developed solutions rather than fragmentation. Elements of this approach are already reflected in sovereign-cloud and enterprise partnerships such as that between SAP and Deutsche Telekom, hybrid models such as those developed by Delos Cloud GmbH and Microsoft, and the German Federal Office for Information Security’s (BSI) work with Amazon Web Services to explore encryption, standards, and validation pathways for sensitive public-sector cloud use. The degree of sovereignty that these initiatives provide should be carefully assessed, but their emergence signals that even US technology firms recognize Europe’s demands for control over its technology stacks. 

The long-term health of the transatlantic technology relationship depends on US and European capabilities to develop credible mechanisms to govern interdependence, rather than assuming that ties will persist by default or purposefully unwinding them wholesale. A sustainable transatlantic approach must focus on common methods for identifying sensitive layers of the technology stack, defining acceptable dependencies, and monitoring change over time. These efforts must be anchored in trust and a sober, risk-informed assessment of technological risk. 

 
The views expressed herein are those solely of the author(s). GMF as an institution does not take positions.