Why the EU Space Act Is Bad For Transatlantic Trade

The European Union’s Space Act threatens to add a volatile new element to the EU-US economic relationship. 

Now that space services are a fast-growing business, the EU is seeking to harmonize rules and strengthen the EU commercial space sector.  However, the draft EU Space Act (EUSA), introduced in June 2025, also contains clear discrimination against US space services providers, a step that could put trade relations between the US and European Union members at risk.  The EU Space Act risks reopening issues in EU-US trade as implementation of the July 2025 US-European Union trade deal unfolds.  The EU Space Act should not be adopted until it is amended to remove rules unfair to US satellite service providers. 

Background and Anti-US discrimination.  The EU Space Act is the culmination of the European Council’s efforts to reduce strategic vulnerabilities and position Europe to benefit from the intensive growth in space services.  The market for Earth observation and positioning-navigation-timing solutions is projected to double by 2035, and the European Commission estimates that about 10% of Europe’s GDP is enabled by satellite signals. 

A significant purpose of the EU Space Act is to eliminate conflicting national laws and establish safety standards.  For instance, France, Italy, and Sweden have national space laws; Germany, Poland, and Spain are still developing theirs.  Ideally, the EU Space Act will break down national barriers and harmonize regulatory standards and safety requirements.  “It will make the skies safer, protect our satellites, and strengthen our space economy,” EU President Ursula von der Leyen wrote.

However, the technical provisions of the EUSA have caused concern. One example is the mandate for mitigating satellite brightness, despite the current lack of technical solutions to meet the proposed standards.  Also, as written, the EUSA establishes stricter controls for satellite operators with over 1,000 satellites, defined as a “giga constellation.”  This artificial category is aimed directly at American interests.  Section 66 accuses operators of constellations with 1,000 or more satellites of increasing the risk of a Kessler event, but this claim lacks a scientific basis.  Other portions of the EUSA also raise warnings about congestion and space debris.  However, operators of large satellite constellations are already incentivized to avoid these problems. Under the Act, EU personnel are entitled to conduct inspections of the facilities of third-country space operators located outside the EU (Article 48, paragraph 4).  These examples highlight major pitfalls for American companies that could limit space services for the EU and spark new tensions.

Pressure on the US-EU Trade Relationship. The EU Space Act threatens to add a volatile new element to the EU-US relationship.  Features of the EUSA function as a non-tariff barrier due to onerous compliance requirements. This could lead to additional restrictions that are harmful to European businesses and to the provision of space services for Europeans. 

The US economic agenda has led to sweeping initiatives to reset trade relations and decrease regulations harmful to US companies.  On July 27, 2025, President von der Leyen and U.S. President Donald J. Trump reached a deal stepping back from the blanket 30% tariffs on the EU.  Both sides welcomed the agreement.  The EU said the deal “restores stability and predictability in EU-US trade and investment for citizens and businesses on both sides of the Atlantic.”  It also secured continued access for EU exports, avoided harmful escalation, and created a basis for continued dialogue on areas of shared strategic interest. 

Although the announcement was positive, several aspects of implementation remain incomplete.  For example, the deal is contingent on EU purchases of over $750 billion in American energy and on $600 billion investment from the EU into the United States.  The Peterson Institute of International Economics noted that “this investment is non-binding and more of an intention, according to the European side, whereas the White House sees it as a promise.” The Trump Administration is on track to net $20 trillion in foreign investment in the United States, and a failure of investment by the EU could jeopardize tariff rates and other fundamentals of the deal, including exceptions.  In September 2025, von der Leyen was criticized in the European Parliament for agreeing to the energy purchases.  Perennial issues from agriculture to steel and copper linger in the transatlantic relationship.

New instances of perceived anti-American discrimination could arise from the EUSA.  Action from the US could be swift.  US Secretary of the Treasury Scott Bessent has pointed out that Section 338 of the Smoot-Hawley Tariff Act of 1930 allows the US President to impose tariffs of up to 50% for five months against imports from countries found to discriminate against US commerce.  EU members could face tariffs as retaliation for discriminating against US satellite operators with large constellations.  This may occur on a bilateral basis or impact the EU-US agreements.  A potential example is telecommunications giant Ericsson, which describes the US as “Ericsson’s largest and most important market” and notes its “pride in being an integral part of the US tech ecosystem.”  The remedy is to treat all satellite operators as equal. 

Beyond this, the EUSA could be bad for business.  Launch services represent a huge potential growth market, especially for large constellation operators.  The EU wants to attract new entrants for launch services. The European Space Agency has selected five launch providers aiming to increase launches after 2026.  If successful, some of the start-ups could capture a share of the launch market.  Kuiper has approval to launch over 3200 satellites, while Starlink has plans for 29,988 satellites in its Gen2 constellation.  However, the EU Space Act may quash launch business for the EU from major American customers.  Joint EU-US investments could also be impacted.  For example, Thales Alenia Space, Leonardo, and Blue Origin signed an MOU on cooperation, including for European industry to supply modules, systems, subsystems, and equipment for the commercial Orbital Reef space station. 

Strong transatlantic ties are essential to national security as the US and allies seek to outpace China in AI, space services, and other technologies.  Finland and Sweden commented: “It is also important that EU legislation does not create any hindrances for EU Member States in terms of the NATO Alliance, taking into account NATO’s Space Policy, which includes co-operation with partners and relevant international organizations as well as opportunities to foster cooperation between NATO and space-related industry and the commercial sector.”

The EU Space Act should be amended to facilitate collaboration between the EU and the US’s commercial interests in this endeavor.