The Looming Breakdown of the Transatlantic Data Privacy Framework
In just 30 days, the Trump administration could make a move that fundamentally disrupts transatlantic data flows—and the consequences could be huge for businesses and regulators alike.
At the center of this looming crisis is the Privacy and Civil Liberties Oversight Board (PCLOB), a critical body that ensures US intelligence agencies operate with privacy safeguards. This oversight is essential for the Transatlantic Data Privacy Framework (TDPF)—the deal that currently allows companies to transfer EU personal data to the US legally.
If the PCLOB is dismantled, as Trump’s team is signaling, the entire framework collapses. The EU Commission would be forced to annul the agreement, making EU-to-US data transfers illegal overnight under GDPR rules.
But what does this mean in practice? And how will this clash between the EU and the US unfold?
Immediate Implications: What Happens If the Deal Fails?
If the TDPF is nullified, we would enter uncharted waters. Here’s what could happen immediately:
- US cloud services become illegal for EU businesses – Companies using US-based cloud providers like AWS, Google Cloud, and Microsoft Azure for processing personal data would face compliance risks and potential legal action.
- US Big Tech must shield EU data centers – To continue operating in Europe, US firms would have to build airtight legal and technical firewalls preventing their US parent companies (and government agencies) from accessing EU data. This has never been successfully implemented at scale.
- A renewed wave of lawsuits and fines – Privacy activists, led by organizations like NOYB, would likely take immediate legal action against non-compliant companies, triggering massive GDPR fines.
The Bigger Picture: The Inevitable Clash Between the EU and the US
This situation would trigger a major political and economic standoff between the EU and the US. Here are possible scenarios for how things could unfold:
1. The "Schrems III" Legal Battle
A new lawsuit (often referred to as Schrems III) would likely reach the European Court of Justice (ECJ), leading to even stricter rulings on data transfers. The EU could double down on data localisation, forcing US companies to fully process EU data within European borders, without any US oversight. This would require massive infrastructure investments from US firms or force them to leave the market.
2. The "US Retaliation" Scenario
The US could pressure the EU to renegotiate yet another data transfer agreement, using trade deals as leverage. Given how central data flows are to global business, the US might threaten trade restrictions on European companies operating in the US, escalating into a larger economic dispute.
What This Means for Businesses
For EU companies relying on US tech infrastructure, this is a wake-up call. The safest long-term move is to reduce dependence on US cloud services and explore EU-based alternatives that comply with strict GDPR requirements.For US businesses operating in Europe, the coming months could bring major operational and legal challenges, requiring urgent adjustments to data handling strategies.
Conclusion: A Defining Moment for EU Data Sovereignty
This crisis could finally force the EU to enforce true data sovereignty, pushing companies towards European cloud solutions and stricter privacy protections.
One thing is certain: the next few months could redefine global data governance—and businesses need to be prepared.
