The trade war started by Donald Trump, involving almost all countries in the world, threatens to get out of control. It is possible that there is no control in this war, since chaos can also be a tool for moving towards the goal. But if we assume that the mechanisms used by Trump are morally outdated and do not take into account digital realities, then everything could end rather badly for the American economy.
Image source: AI generation Grok 3/3DNews
On May 20, 2025, a major international consulting company, Allianz Trade, published a report based on a survey of 4,500 companies worldwide, the purpose of which was to “identify the consequences of escalating trade tensions.” According to the analysts’ assumption, the correctness of which itself may become a topic for debate, Trump does not take into account the US economy’s shift to digital trade and the benefits that the state receives from this.
Analysts say digital trade — from advertising to sales of services and products — is not counted in official US statistics. For this reason, Trump allegedly mistakenly believes that there is a trade imbalance with some countries, such as the EU, when “hidden” from the statistics, digital trade provides the US with an overall surplus of at least $600 billion in categories such as digital advertising, streaming video, cloud platforms, and online payments.
The Allianz Trade Group believes and warns that the US fixation on its trillion-dollar goods deficit risks undermining “the fastest-growing segment of global trade” – the “invisible export” of financial and digital services. Digital services are the soft and vulnerable underbelly of the US, which could remain vulnerable to attack from any direction due to Trump’s tariff policies.
Partially to justify Donald Trump’s actions, analysts explain that he may not be aware of the depth of the problem for the simple reason that tracking all the threads of digital services and the jurisdiction of their agents is quite a difficult task. But this is also not a reason to act like a bull in a china shop.
According to Allianz Trade, “the scale of this hidden trade is enormous.” Their report says that over the past two decades, these “hidden” exports have “far outpaced the growth of merchandise exports,” but because of the way these services are provided, “this trade is not captured in traditional statistics.”
Allianz Trade warns that Trump needs to “rethink trade policy and narratives” as soon as possible to take a closer look at digital trade. Otherwise, the US president risks undermining his country’s trade advantage, which, as Allianz Trade analysts point out, “is based on America’s innovative companies and vast data infrastructure.” This advantage could be used to good effect in negotiations with other countries, but this is not yet the case.
«U.S. digital exports now account for a significant share of global trade (around 3.6% of all global trade, and growing rapidly), Allianz Trade reports. “These ‘invisible’ exports boost U.S. trade revenues without filling a single container ship, highlighting a new reality: routers and data centers are as strategically important to maintaining U.S. leadership as ports and factories.”
The agency warned that Trump’s trade tactics, which he himself has failed to implement and even admits, could even threaten the US’s dominance as “the world’s hub for digital content and technology services.”
Analysts say US trading partners are already considering tariffs or taxes on digital services provided by US companies in their national jurisdictions, which could become a tool for “retaliation” or compensation for losses from Trump’s tariffs. In other words, the US is not protected in this area and is therefore vulnerable. Moreover, if Trump’s proposed measures become a permanent feature of global trade, it could even “break the internet,” as companies are forced to customize services depending on the location of users.
A similar opinion is shared by former Serbian diplomat Jovan Kurbalija, executive director of the DiploFoundation and an expert on the digital economy. “If trade tensions escalate into the digital sphere, this could have far-reaching consequences for the giants of Silicon Valley and the digital economy around the world,” he wrote on his blog some time ago.
The threat of retaliatory tariffs targeting the digital services industry has become closer to reality after European Commission President Ursula von der Leyen confirmed to the Financial Times last month that she was actively developing such countermeasures should Trump’s trade talks with the European Union fail.
These measures could potentially include “a tax on digital advertising revenue that would hit tech companies like Amazon, Google, and Facebook✴.” But the biggest threat was the promise of uniform “US-EU services tariffs.” This would mean that all EU countries would treat American tech companies the same way when doing business, making it impossible for them to evade tariffs by exploiting loopholes in one country or another.
Trump’s aggressive tariffs on goods have provided “both moral and tactical grounds for the EU and other countries to accelerate the introduction of digital taxes” as a countermeasure, Kurbalia wrote. He also offered foreign governments the attractive idea of “recovering revenues from foreign tech freeloaders” — companies that find ways to avoid paying taxes locally. Overall, the former diplomat recommended that foreign governments move toward a broader “use of digital services taxes as a diplomatic tool” to “force the U.S. into balanced negotiations.”
For U.S. tech companies, prohibitive tariffs or nation-state taxes could escalate trade tensions and, as Allianz Trade reports, perpetuate uncertainty that could cause U.S. companies to struggle to ensure reliable and affordable supply chains. Put simply, U.S. companies will do everything they can to maintain profitability, and will think about themselves rather than the country’s economy, even to the detriment of the country if it benefits them.
Separately, CareYaya Health Technologies CEO Neal K. Shah warned that “digital service tariffs will directly reduce revenues for U.S. tech companies.”
At its worst, digital trade warfare threatens to splinter the internet’s integrated infrastructure, fragmenting the world wide web in ways that could “undermine decades of incremental technological connectivity.” The consequence would be higher hardware costs to provide parallel services in foreign jurisdictions. Users would find the same platforms offering different features, prices, and capabilities in different countries (as if that weren’t already the case).
«For startups and industry innovators, Shah predicts, “fragmentation means higher compliance costs, limited market access, and slower growth.” Such a world also risks ending “the era of globally scalable digital platforms,” dampening investor appetite for technology, and reducing global GDP “by 5% over the next decade as barriers to digital trade increase.”
And if tariffs on digital services become a permanent fixture of global trade, Shah suggested, that could undermine America’s technological dominance in the long term, including in areas critical to national security such as artificial intelligence.
«Trump’s tariffs may dominate today’s headlines, but the quiet war over digital services will shape tomorrow’s economy,” Kurbalia wrote.
As for Trump’s opinion on the threats voiced, he ordered back in January to work out countermeasures in the event of a trade war in the digital sphere. The US President bluntly stated that “only America should have the right to tax American companies.” Therefore, the response to the introduction of tariffs on digital services provided by American companies may be new tariffs.
Instead of moving their operations to the US as Trump demanded, US companies surveyed by Allianz Trade are rerouting supply chains through “emerging trading hubs” such as Southeast Asia, the United Arab Emirates, Saudi Arabia and Latin American countries where tariffs are currently lower.
But perhaps even more disappointing for Trump is the fact that 50% of American companies surveyed confirmed that they were considering increasing investment in China in response to the U.S. shift in tariff tactics. Only 8% said they were considering reducing investment in China.
Allianz Trade suggested Trump may be stuck in the past with a trading strategy that is too commodity-focused, while the tech industry needs more modern tactics to maintain America’s advantage in global markets.
«An economy that can produce globally in-demand services, from cloud software to financial engineering, is less dependent on physical supply chains and less vulnerable to commodity price swings, Allianz Trade reports. “The U.S. advantage in digital and financial services is not just a fluke on the trade register; it has become a structural advantage.”
An interesting consequence of this global movement could be a sudden transition of everything and everyone to open source software. At first, this will make companies poorer, but it is also a path open to industry giants, who, in an attempt to save money, will sooner or later use it.
The transition to open source will protect against tariffs and in the long term may make open source software ubiquitous. It will also weaken the ability to regulate digital services, and even make them somewhat meaningless. But there may be no turning back.