So for purchases within Europe, the end consumer is already paying a 25% tax on the digital services provided by google.
But for good and services sold outside the EU, and remember that Europe have export driven philosophies, there is essentially no government revenue from foreign digital services.
Europe deserves compensation for buying American digital services in the same way America deserves compensation for buying German cars. It doesn't. Instead it needs to focus on a more competitive business environment where the money is cycled more times through the economy before ultimately making it's way to the government.
Every time I think to myself "Well, at least I'm not a libertarian," I read a sentence like that and after first getting confused (What does that even mean?) I then feel sad because I'm pretty sure if I parsed through the logic it would turn out that I after all more of libertarian than most of the people I know.
You've stated this as a fact, but it's not self-evident. There are obviously cases where some degree of "protectionism" makes sense. For example, you probably wouldn't want to let yourself get into a situation where another country supplies 100% of your food, if you could help it. As an extreme case, if you can produce all your food locally and it only makes your food 1% more expensive (than the tariff-less case), that's very likely a great trade-off.
Some degree of protectionism can make sense in certain circumstances. I'm not claiming it necessarily makes sense in this case (could very well be a terrible idea), but I think you'd need some evidence or reasoning behind the claim that it's definitely a bad thing for Europe.
A time will come when the US is not the global digital products leader. I surmise that the US will then be very much in favor of digital taxes.
That is undeniably one aspect of it. However, I think the other one is that digital services have become a larger part of the world economy and they are structurally unlike anything that existed when the current rules of taxation were devised.
Traditionally, services required people on the ground and local subsidiaries that were subject to taxation and regulation. For instance, you can't run banking and insurance services for European customers entirely from the US. Trade in goods always benefitted from geographic proximity as well, even without tariffs.
A situation where you can provide services to a huge number of customers on the other end of the world without any local representation or taxation of corporate profits (or other income) is historically relatively new and does in my view justify calls for reform of global taxation.
>They want to levy a tax against an American import to help this trade imbalance, while claiming it doesn't amount to a trade tariff.
Claiming that trade imbalances as such are somehow unfair and need to be remedied is in my view nonsense, but it is an idea popularised by Mr. Trump himself.
You can't have it both ways unless you accept that mercantilist power politics is all there is and neither enlightened self interest nor principles play any role whatsoever. I think we can do better than that.
The negotiations broke down because the Europeans have failed to develop as successful a digital economy and run a large digital economic deficit with the United States. They want to levy a tax against an American import to help this trade imbalance, while claiming it doesn't amount to a trade tariff. Given the amount of economic value at stake, of course the Americans are going to view it as an unjust trade tariff and fight against it, while the Europeans will view it as a fair and justified tax for value captured in their domestic market. The global minimum tax has mutual agreement, however, so don't use that to distract or straw-man non-existent disagreement, avoiding the real and essentially intrinsically zero-sum crux of the disagreement here.
[1] https://en.wikipedia.org/wiki/Double_Irish_arrangement