Since returning to office, President Trump’s trade policy has shifted focus beyond traditional tariffs toward establishing a framework for international commerce in the digital age. The administration has embarked on a series of bilateral and preliminary agreements aimed at creating modern trade rules tailored to an economy increasingly driven by data, software, cloud computing, and artificial intelligence (AI).

Currently, digital goods and services make up approximately 10% of the U.S. gross domestic product and represent about a quarter of American exports. Despite this significant economic contribution, existing international trade regulations—largely shaped when the World Trade Organization (WTO) was founded in 1995—do not adequately address the realities of digital commerce. Much of the system remains oriented around physical goods transported by shipping containers, leaving digital trade vulnerable to regulatory barriers that function much like tariffs but are less apparent and harder to dispute.

The U.S. trade representative has identified 146 such digital barriers across 43 jurisdictions, including digital services taxes that disproportionately affect American companies, restrictions on cross-border data transfers, requirements for data localization, and mandates for forced technology or intellectual property transfers. These measures have broad implications beyond the technology sector, impacting manufacturers, agricultural exporters, and workers across the U.S. economy. For example, medical-device firms reliant on proprietary AI-enhanced software face potential loss of intellectual property rights in foreign markets where governments demand access to source code. Similarly, automotive manufacturers utilizing AI and cloud services throughout their supply chains risk increased costs and operational inefficiencies if data is required to be stored locally.

In response, the Trump administration has prioritized bilateral agreements with countries including Indonesia, Cambodia, and Malaysia. These accords aim to prohibit discriminatory digital taxes, protect cross-border data flows, maintain duty-free status for electronic transmissions, and restrict government actions that might compel the transfer of proprietary technologies or disadvantage foreign competitors. The agreements also contain provisions to support digital infrastructure development and safeguard against compelled disclosures of source code.

Experts caution, however, that such bilateral deals risk becoming fragmented, with uneven enforcement and limited recourse for violations undermining their impact. To realize long-term benefits, the administration must ensure robust enforcement of existing commitments and negotiate future arrangements that address discriminatory regulations disguised as safety measures, which can impede foreign competition.

The administration views these efforts not as isolated initiatives but as steps toward forming a broader coalition. Nearly 20 countries have adopted elements of the same core digital trade principles, offering an opportunity to build on these deals and establish global standards for AI and digital commerce. Ultimately, the goal is to modernize the global trade system comprehensively to keep pace with technological transformation, rather than relying on a patchwork of bilateral agreements.