At the AI Summit in Paris on February 11, 2025, Vice President JD Vance said that “excessive regulation of the AI sector could kill a transformative industry just as it’s taken off.” He stated that the Administration “invites your countries to work with us,” but added that “the Trump Administration is troubled by reports that some foreign governments are considering tightening the screws on U.S. tech companies with international footprints. Now, America cannot and will not accept that, and we think it’s a terrible mistake not just for the United States of America but for your own countries.” He highlighted the EU’s Digital Services Act: “Many of our most productive tech companies are forced to deal with the EU’s Digital Services Act and the massive regulations it created about taking down content and policing so-called misinformation.”
Ten days later, President Trump issued a memorandum entitled “Defending American Companies and Innovators from Overseas Extortion and Unfair Fines and Penalties” (the Overseas Extortion Memorandum). The Memorandum states: “My Administration will not allow American companies and workers and American economic and national security interests to be compromised by one-sided, anti-competitive policies and practices of foreign governments.” The Memorandum directed a review of such policies and practices, with the results to be reported to the President.
This article walks through relevant aspects of the Overseas Extortion Memorandum and the responsive reports to date.
The Overseas Extortion Memorandum seeks to address unfair tax and trade practices abroad that have negative economic impacts on American companies operating in other countries. While the main focus of the Memorandum is on tariffs and trade, it also refers to regulatory restrictions affecting U.S. tech companies.
- Section 1 states: “Foreign countries have additionally adopted regulations governing digital services that are more burdensome and restrictive on United States companies than their own domestic companies. Additional foreign legal regimes limit cross-border data flows, require American streaming services to fund local productions, and charge network usage and Internet termination fees. ”
- According to Section 2, it is Administration policy that “where a foreign government, through its tax or regulatory structure, imposes a fine, penalty, tax, or other burden that is discriminatory, disproportionate, or designed to transfer significant funds or intellectual property from American companies to the foreign government or the foreign government’s favored domestic entities,” the Administration will act by imposing tariffs and “taking such other responsive actions necessary to mitigate the harm to the United States and to repair any resulting imbalance.” Section 2 goes on to identify considerations for “responsive action,” concluding with a catch-all phrase: “Any other act, policy, or practice of a foreign government that serves to undermine the global competitiveness of United States companies.”
- Section 3(c) directs the Secretary of the Treasury, the Secretary of Commerce, and the USTR to identify trade and regulatory practices by other countries that would “discriminate against or otherwise undermine global competitiveness or operations” of U.S. companies. Section 3(d) directs the Secretary of the Treasury, the Secretary of Commerce, and the USTR to investigate EU and UK policies that may require the “use or development of U.S. companies’ products or services in ways that undermine freedom of speech, political engagement, or otherwise moderate content.”
- Notably, Section 3(c) also refers to the America First Trade Policy Memorandum. Under this Trade Policy Memorandum, the USTR is directed to review and identify any “unfair trade practices by other countries” and recommend remedies in Section 2(c). Section 5(c) of the Trade Policy Memorandum requests that USTR compile their findings and recommendations in a unified report by April 1, 2025.
In sum, the above two Memoranda (on Overseas Extortion and America First Trade Policy) directed the USTR to submit a report in April identifying foreign regulatory practices that impose a discriminatory or disproportionate regulatory burden on U.S. companies doing business abroad. In response, the USTR submitted that report to the President, and on April 3, 2025, the White House released a summary. Under Chapter 24, the Summary refers to the Overseas Extortion Memorandum, mentioning that WTO members have committed to a temporary moratorium on customs duties on electronic transmissions. The Summary calls out India, Indonesia, and South Africa for violating this agreement because they seek to “tariff the flow of data” which harms competition for U.S. technology companies. Notably, the Summary does not include any “responsive actions” for the series of measures taken by the EU to regulate privacy, AI, and digital services.
Although the Summary is silent on EU regulatory approaches, a separate USTR report, released on March 1, 2025, describes EU digital regulations in detail. This is the latest in a series of annual reports on trade barriers, stretching back to the 1980s. In the 2025 report, the USTR for the first time highlights EU digital regulations as “digital trade barriers.” It includes extensive descriptions of the Digital Service Act, Digital Markets Act, Artificial Intelligence Act, and Data Act. It also includes a section on “data localization,” in which it discusses the Schrems II decision and the EU-US Data Privacy Framework. By way of comparison, the 2024 iteration of this report did not describe those EU regulatory measures or the Schrems II decision (which came out in 2020), and referred to “data localization” only in the sections discussing seven non-EU countries (e.g., China, Russia, and Vietnam).
The Overseas Extortion Memo presented an opportunity for identifying actions to respond to what Vice President Vance described as a “tightening of the screws” on U.S. companies. Although the Summary Report did not include any such measures, given the findings of the 2025 USTR Foreign Trade Barriers Report, the PAB research team will be carefully monitoring future developments in this area.
This article is based on research and analysis conducted by Natalia Baigorri during the Spring 2025 semester.