Washington has put Brussels on notice that European businesses could pay a heavy price in the American market if the European Union moves to shut US satellite operators out of part of its airwaves, sharpening a transatlantic dispute over who controls Europe's critical technology. The signal from Washington is that Europe's quest for technological independence — from satellite airwaves to cloud rules and multibillion-euro fines on major US technology companies — could come with a bill payable in the American market.

Andrew Puzder, the US ambassador to the EU, told the Financial Times that European companies could face severe retaliation in the US market if the bloc limits American rivals' access to parts of the EU market. He said European firms should be alert to the possibility of retaliation and suggested the consequences would be severe, given how much those companies depend on access to the large US market.

Spectrum reservation at the center of the dispute

The flashpoint is a European Commission proposal, tabled this year, to set aside a slice of the spectrum used for direct satellite-to-smartphone connections for European operators. The reservation would shrink the frequencies available to American and Chinese providers, including SpaceX and its Starlink network. Spectrum is a finite, licensed resource, so carving out bands for EU operators narrows the room left for rivals in an emerging service that links standard handsets directly to orbiting satellites.

Puzder accepted that Europe has a legitimate interest in safeguarding sensitive government data, but argued that rules designed to weaken American competitors in order to lift domestic ones would not make European industry stronger. US products in the sector were reliable and trusted, he said, adding that Europe did not need what he called “synchronised mediocrity”.

SpaceX has already objected strongly to the spectrum plan, warning that it could degrade connectivity in Ukraine, where Starlink has carried both civilian and military communications since Russia launched its full-scale invasion — a reminder that the outcome of a European spectrum debate would reach well beyond commercial users.

A broader sovereignty agenda

The proposal sits within a wider European drive for technological sovereignty, as policymakers look to reduce reliance on US technology amid concern over the unpredictability of President Donald Trump and the risks of foreign control over critical infrastructure. Together with the cloud legislation and the enforcement of digital competition rules, the spectrum plan forms a central plank of that agenda.

Alongside the spectrum proposal, the Commission has put forward a Cloud and AI Development Act that would set sovereignty conditions for providers of sensitive cloud services while helping European firms grow into alternatives to US groups. Puzder criticised that legislation and also questioned the EU's enforcement of the Digital Markets Act — the bloc's competition rulebook aimed at large digital platforms — asking whether multibillion-euro fines on American technology companies were really about competition or about raising revenue for Europe. He argued that the regulatory approach risked deterring US investment and undermining Europe's own tech ambitions.

Rather than trying to rein in American firms, he said, Washington and Brussels should cooperate to stay ahead of China in artificial intelligence and quantum computing, echoing Trump's view that losing that contest would be the worst outcome.

The Commission, for its part, has defended the spectrum proposal, saying it encourages new entrants and more diverse EU suppliers while remaining open to operators from outside the bloc.

What markets are watching

The warning adds a fresh transatlantic trade risk to a market that had largely treated EU digital regulation as a compliance issue rather than a trigger for US countermeasures. European exporters with heavy US revenue exposure are the most obvious channel if rhetoric turns into action, while EU satellite and telecom operators that would benefit from reserved spectrum now face a more contested path to that advantage. For the euro, a renewed tit-for-tat narrative is a modest headwind at the margin, though nothing concrete has been announced. Investors will look for whether Washington links tech regulation to broader tariff policy, which would raise the stakes well beyond the satellite sector.

How Brussels proceeds with the plan, and with its wider sovereignty agenda, will now be watched for signs of whether this dispute moves from rhetoric toward trade measures.