Trump's technology policy: the big break

Contents

When Donald Trump moves into the White House for the second time in January, his impact will extend beyond the borders of the USA – and into the IT world. What exactly will happen is not yet foreseeable, but the direction seems clear: Trump and the Republicans have made repeated references to their technology policy during the election campaign.

Part of this is a continuation of what characterized Trump's first term in office. A core part of Trump's promise is less state regulation. This applies in particular to the tech sector, some of which actively supported Trump during the election campaign. Trump and his supporter Elon Musk agree that a different understanding of freedom of speech will also play a role.

Data transfer from the EU

It is already fairly certain that Trump will once again reshuffle and trim the federal authorities. In digital terms, this concerns the Federal Communications Commission (FCC), which is the supervisory authority for broadband policy and the radio spectrum, among other things. Secondly, the Federal Trade Commission (FTC) is affected: This had slowly reactivated its consumer and data protection activities after the first Trump administration under Joe Biden.

The FTC is also the authority responsible for monitoring compliance with the "Transatlantic Data Privacy Framework" agreement between the USA and the EU on the minimum standard of protection for EU personal data once it has been transferred to the USA. The basis for the resumption of data transfer by the EU Commission was only achieved with great political effort –, including through a presidential order by Joe Biden –.

However, presidential decrees can be revoked at any time by the sitting president – in the case of the Transatlantic Data Privacy Framework, this would almost certainly put an end to GDPR-compliant data transfers to the USA following the previous Schrems rulings of the European Court of Justice. This could pose a huge problem for US companies, but also for those who use their services, such as their cloud services: Without a valid legal basis, the transfer is illegal and subject to fines.

Less regulation

Fewer rules, less responsibility for companies, more free market is the guiding principle for Trump 2.0, especially in the digital sphere. For example, the Republicans wanted to roll back the existing – regulation of cryptocurrency trading, which is not exactly comprehensive from a European perspective –. This could benefit crypto assets themselves, but also the trading platforms. There was active support from their ranks during the election campaign.

In 2022, President Biden had issued a presidential decree on measures for stronger consumer protection and the development of a digital central bank currency – Both are on the new Trump administration's hit list. At the time, Biden justified the project on the grounds of national security interests due to the dangers of unregulated crypto markets. In anticipation of a crypto-friendly US government, some cryptocurrencies, above all Bitcoin, skyrocketed in the days following the election.

Artificial intelligence

Trump and Republican party supporters also addressed another "executive order" during the election campaign: The so-called "AI-EO". With this, Biden had at least introduced certain guard rails for the development and use of artificial intelligence (AI). Trump also wants to break down the regulatory guard rails for AI development in the military sector and thinks little of international agreements that regulate US companies. However, the AI scepticism of his advisor Elon Musk could have a moderating effect here.

In addition, some of Trump's measures are likely to have a huge side effect: With the expected decrease in federal regulation, there is a high probability that the trend towards single-state legislation will increase again. In the past, states such as California and Illinois have passed their own laws to protect privacy or against the use of biometric AI.

For tech companies, this means one thing above all: they have to comply with regulation in up to 50 states in order to cover the USA as a whole. Combined with the class action system of class action lawsuits with massive threats of punishment, this is a potentially effective method of at least better protecting their own state citizens.

A new interpretation of the alliance of values

However, enforcing EU law against US companies could become much more difficult. The new administration is likely to toughen the tone towards the EU. Trump's Vice President-elect J.D. Vance, for example, called on "especially our European allies" to respect freedom of speech with regard to the EU regulation of Big Tech.

The fact that well-known US investors such as Elon Musk, Peter Thiel, Marc Andreessen and others could also register their business interests with Trump via the short official channels of a phone call and then have them turned into policy is a huge worry for those responsible in Brussels and Berlin.

Chips & China

Vance is also clear on another point. "If China dominates in computer chips, they will dominate in AI". The Trump administration will want to continue to build up the US chip industry accordingly. The Biden administration had gagged TSMC, Intel and Co. with extraneous rules, said Vance – with anti-discrimination regulations, for example. The Republicans want to abolish these anyway – but it is doubtful whether they are responsible for Intel's problems. Nevertheless, it seems clear that the US chip industry is likely to grow massively in the coming years –, especially in the USA.

This is because Trump already discovered trade policy as an instrument of his foreign policy during his first term in office. And during the 2024 election campaign, he also announced that he would raise tariffs on imports into the US if other countries were to impose higher tariffs of their own. In doing so, he wants to strengthen domestic production or bring it back to the USA.

This is primarily aimed at China. Trump sees a huge need for adjustment here – Chinese tariffs are "341 percent" higher. The actual difference in tariffs between the USA and the EU is manageable: EU goods are subject to an average tariff of 3.5 percent in the USA and 5 percent in the opposite direction.

(olb)