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| A high-tech European manufacturing facility where robotic arms assemble electric vehicle battery modules while workers supervise production. A subtle EU flag overlay symbolizes the European Union’s push for domestic manufacturing and reduced reliance on foreign supply chains through its Made in Europe strategy. |
For the first time in decades, Europe is preparing to pay more on purpose.
The European Union’s emerging “Made in Europe” strategy is not merely an industrial adjustment. It is a geopolitical shift. After years of debate, EU leaders have backed plans to increase domestic manufacturing and reduce dependence on external powers, especially the United States and China.
The forthcoming Industrial Accelerator Act would introduce local-content requirements in strategic sectors such as renewables, batteries, and electric vehicles. The ambition is clear: raise manufacturing’s share of EU GDP from roughly 14 percent today to 20 percent by 2035.
This is not just about factories. It is about strategic control.
The Data Behind the Anxiety
At the beginning of the 2000s, the EU accounted for roughly 25 percent of global manufacturing output. Today, that figure has fallen to around 16 percent, according to World Bank manufacturing data:
https://data.worldbank.org/indicator/NV.IND.MANF.ZS
Meanwhile, Europe’s economic model remains heavily export-driven. In 2023, the EU recorded a goods trade surplus of €502 billion, according to Eurostat:
https://ec.europa.eu/eurostat/statistics-explained/index.php?title=International_trade_in_goods
That surplus reflects competitiveness. It also reflects exposure.
The Ukraine war exposed something deeper. Before Russia’s full-scale invasion, the EU depended on Russia for roughly 40 percent of its gas imports, according to the European Commission:
https://energy.ec.europa.eu
When those flows stopped, energy-intensive industries were hit hard. German chemical producers, steel plants, and glass manufacturers saw production costs spike sharply. BASF, one of Europe’s largest chemical companies, announced capacity reductions in Germany in 2023, citing permanently higher energy costs.
German industrial production fell by 1.5 percent in 2023, according to Destatis:
https://www.destatis.de
That is not abstract decline. It translates into closed furnaces, reduced shifts, and skilled workers reassigned or laid off.
The China and US Squeeze
While energy costs surged, global competition intensified.
The European Commission launched anti-subsidy investigations into Chinese electric vehicles in 2023:
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_4752
At the same time, the United States moved aggressively through the Inflation Reduction Act, tying green subsidies to domestic production:
https://home.treasury.gov/policy-issues/inflation-reduction-act
China supports scale.
America supports domestic industry.
Europe relied on openness.
That balance no longer feels stable.
What “Made in Europe” Would Do
The proposal under discussion would:
• Tie public subsidies to minimum EU-made component thresholds
• Require up to 70 percent local content in certain critical sectors
• Prioritize European suppliers in public procurement
• Link industrial capacity to defence autonomy
Commissioner Stéphane Séjourné has framed competitiveness as a geopolitical imperative.
China has “Made in China.”
The US has “Buy American.”
Europe, he argues, must respond in kind.
The language has shifted from efficiency to sovereignty.
Why It May Not Work
The EU is divided.
France supports a strict “Made in Europe” approach. Germany prefers a broader “Made with Europe” framework that includes the European Economic Area and trusted partners. Export-oriented economies in Scandinavia and the Baltics warn that heavy protectionism undermines the single market.
There is also a cost problem.
Local content rules mean excluding cheaper global suppliers. That raises production costs. Subsidies can offset some impact, but taxpayers ultimately fund those subsidies.
The European Central Bank has repeatedly warned that eurozone inflation remains sensitive to supply-side shocks:
https://www.ecb.europa.eu
If production becomes structurally more expensive, inflationary pressure does not disappear. It shifts.
Critics argue that Europe’s deeper competitiveness issues lie elsewhere: fragmented capital markets, regulatory complexity, slow scaling of innovation, and uneven energy policy coordination.
Industrial nationalism may protect. It does not automatically reform.
The Strategic Calculation
The EU now faces a structural choice.
Globalization rewarded Europe’s export model for decades. Persistent trade surpluses since 2008 confirmed its strength. But interdependence has evolved into strategic vulnerability.
Russia weaponized energy.
The US weaponized technology access and sanctions regimes.
China leverages industrial scale and state subsidies.
Economic neutrality is no longer guaranteed.
“Made in Europe” signals that Brussels believes the era of benign globalization has ended. The policy accepts higher costs today to reduce strategic risk tomorrow.
Whether that trade-off strengthens Europe or gradually weakens its competitiveness will define the next decade.
Europe is not just building factories.
It is redefining what security means in an economic age.
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