Published on: April 8, 2025 / update from: April 8, 2025 - Author: Konrad Wolfenstein
In truth, the Magnificent 7, according to estimates
The real trade balance: How digital services distort US EU trading
The real trade balance: How digital services distort US EU trading and achieve an EU surplus
The claim that the Magnificent 7 (Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla) cause a US trade surplus of 112 billion euros compared to the EU, is based on a specific calculation, taking into account digital services not recorded. These services, such as advertising revenues, cloud services and software sales, are often handled through European subsidiaries in countries such as Ireland or Luxembourg and are therefore not taken into account as direct US exports in the trade balance.
According to the available data, the EU recorded a service deficit of 109 billion euros compared to the United States in 2023. The not recorded sales of Magnificent 7 from digital services with the EU amount to around 160 billion euros. If you add these sales to the official US service balance sheet, the trade deficit of 48 billion euros would turn into a surplus of 112 billion euros.
However, this calculation is a simplified presentation and depends heavily on the methodology of how digital services in the trade balance are taken into account.
The real problem: There is currently no consolidated international regulation to record such sales, which leads to these distortions and various interpretations.
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The Magnificent 7 and their role in the transatlantic surplus
The current trade debate between the USA and the EU is determined by a surprising factor: While a US trade deficit is officially mentioned, reality could be different if one fully takes into account the role of “Magnificent 7”-the leading US technology group.
The official trade balance between the USA and the EU
The official statistics draw a complex image of economic relationships between the United States and the European Union. In 2024, the United States recorded a current account deficit of just under 1,000 billion euros, with around 130 billion euros in the deficit with the EU in the first three quarters in 2024. If you only look at the trading in goods, the balance for the United States is even less favorable.
For 2004, the EU exported goods worth 531.6 billion euros to the United States, while the United States only sold goods worth 333.4 billion euros to the EU, which results in a US trade record deficit of 198.2 billion euros. This number is often used by US President Donald Trump to justify his protectionist trade policy.
However, the trade in goods is only part of the economic exchange. In the service trade, the United States traditionally has a surplus. In 2023, US service exports to the EU amounted to around $ 261.7 billion, while imports from the EU were around $ 185.1 billion, which results in a US surplus of $ 76.5 billion. Other sources name a US surplus in service trade with the EU of EUR 108.6 billion for 2023.
The hidden dimension: digital services
However, what is not adequately taken into account in these official statistics is the growing importance of digital services provided by US technology companies-in particular by the so-called “Magnificent 7” (Apple, Microsoft, Alphabet/Google, Amazon, Meta/Facebook, Tesla and Nvidia).
A current study shows that the US digital exports in 2021 exceeded those of the EU-27 more than ten times: $ 672 billion compared to $ 48 billion. This indicates a significant digital gap between the two economic areas.
The Irish and Luxembourg Factor
A crucial aspect for understanding the actual trade currents is the operating structure of the US technology companies in Europe. Many of these corporations have settled their European headquarters or important subsidiaries in countries such as Ireland and Luxembourg, often due to favorable tax regulations.
When European consumers or companies use services from these US technology companies (such as Google Ads, Amazon Web Services or Meta ADS), invoicing is often carried out via these Irish or Luxembourg subsidiaries. In the standard trade statistics, these transactions are recorded as an intra-Community EU trade, not as direct US exports to the respective European countries.
The actual trade balance taking into account the Magnificent 7
The Magnificent 7 have achieved a dominant position in the global economy in recent years. Three of them (Apple, Nvidia and Microsoft) each achieved a market capitalization of more than $ 3 trillion. These enormous corporate values reflect their economic power and global reach.
If you include the non-correctly recorded service exports of the US technology companies in the trade balance, the picture could change significantly. According to official data, the EU had a deficit in computer services compared to the United States in 2023, which was mainly booked in Ireland, where the Big Tech Groups operate its European headquarters.
According to various estimates, the service sales of the US technology companies that are not recorded in the US trade balance are amounted to significant amounts. The discrepancy between different data sources when recording digital trade between the EU and the USA is considerable.
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Challenges in the recording of digital trade currents
The scope of digital services is still being recorded in the commercial statistics. The challenges extend from the definition of digital services to measurement problems to contradictions between different data sources.
An important problem is the structure of multinational companies and the associated question of transfer prices. It is questionable whether today's transfer prices fully map the internal value compartments in the digital economy.
Trump and trade policy
US President Donald Trump has repeatedly criticized the United States' trade balance with the EU and claims that the EU was only founded "to rip off the United States". This rhetoric may be used to justify its protectionist trade policy.
Trump recently announced a new customs package that led to strong spa losses on the stock exchanges. The shares of the Magnificent 7 were hit particularly hard and lost more than $ 800 billion in market capitalization on April 3, 2025. These measures could continue to burden transatlantic trade.
However, the US President has also signaled willingness to talk, but only on the condition that other countries are willing to make massive concessions. He emphasizes that he is no longer willing to accept trade deficits.
Reactions of the EU
In response to Trump's tariffs, the EU in turn consider punishment tariffs to digital US services. France has proposed to prove digital services from the USA with tariffs if they are used in the European Union. Germany seems to support this plan.
Such a digital tax could have a significant impact. According to an expert opinion from the Center for European Policy Studies, a transfer to the European online sales of the EU companies of the EU could already provide an increase of almost 40 billion euros next year.
The underestimated power of “Magnificent 7” in the transatlantic trade balance
The trade balance between the USA and the EU is more complex than the official statistics suggest. If you take into account the actual economic activities of the US technology companies in Europe, the US trade deficit could be significantly lower or even turn into a surplus.
The “Magnificent 7” play a key role in this equation. Your services are used in a large scale in Europe, but due to the corporate structures and accounting practices, these transactions are not fully recorded as US exports.
The current trade voltages between the USA and the EU are therefore not only a question of the actual trade weight weights, but also to perceive and interpret this data. A more comprehensive and more precise recording of digital trade currents could contribute to a more balanced discussion about the transatlantic economic relationships.
The challenge for political decision -makers on both sides of the Atlantic is to develop a trading system that adequately takes into account the realities of the digital economy and maximizes the advantages of international trade for everyone involved.
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