Even in your example it wouldn’t mean the cloud is dead, the big US cloud companies would suffer as smaller country and region specific cloud providers thrive.
It's already the case, no? My company recently contracted G Suite with a guarantee that the data stays in Europe.
https://fortune.com/2019/10/30/europe-cloud-independence-gai...
> Tired of its businesses turning to foreign cloud-computing providers such as the Google, Microsoft and Amazon, the German government is leading the push for a European cloud network called Gaia-X. France is also on board. “Data will be the most important raw material of the future,” said German Economy Minister Peter Altmaier in a statement this week. “The European economy urgently needs an infrastructure that ensures data sovereignty.”
https://www.zdnet.com/article/eu-turns-from-american-public-...
> Just like their American counterparts, more than half of European businesses with over 1,000 employees now use a public cloud platform. But European governments aren't so sure that they should trust their data on Amazon Web Services (AWS), Azure, Google Cloud, or the IBM Cloud. They worry that the US CLOUD act enables US law enforcement to unilaterally demand access to EU citizens' cloud data -- even when it's stored outside the States.
https://www.wsj.com/articles/european-cloud-project-draws-ba...
> Germany and France are introducing a government-backed project to develop European cloud infrastructure in an effort to help local providers compete with U.S. technology giants, which dominate the global cloud market.
https://www.uscloud.com/blog/3-reasons-33-companies-ditching...
> However, if you dig deeper, you’ll find that a growing number of organizations have public cloud buyer’s remorse. A recent VotE Organizational Dynamics 2017 survey found more than one-third of companies surveyed migrated data from public to private clouds in 2017. Forrester Research shows migration to hosted private clouds are on the upswing, with adoption rising from 28% to 33% in North America in Europe. In that same survey, 36% of cloud adopters and planners state hosted private cloud is – or will be – their primary computing platform.
https://www.cybersecurity-insiders.com/idc-says-that-compani...
> Out of 400 IT decision makers who participated in the survey, more than 80% of them agreed that their organization either migrated applications or data that were primarily on public cloud environment to on-premises data centers or private cloud solutions in the past 14 months.