These are the themes echoed in European diplomatic circles and the corridors of power across Europe. The Spanish presidency of the Council of the European Union and speeches by senior leaders have underscored a shared concern: the economies of 27 member states must be defended as the United States and China pursue aggressive protectionist policies. Free trade within the EU appears to be fading, a shift accelerated by recent leadership changes, global health crises, and the disruption caused by Russia’s invasion of Ukraine. The goal has shifted from simple openness to safeguarding value chains and securing essential raw materials. This moment blends protectionism with a broader strategy of derisking—an economic mix whose outcomes remain uncertain.
Europe’s security chief, Josep Borrell, emphasizes a shift in strategy. The EU’s long-standing mix of peace, free trade, and human rights is giving way to more confrontational approaches. The international arena is entering a phase described as unfair competition, where state subsidies distort markets. In Strasbourg on 13 September, the High Representative warned that subsidies are biasing trade and undermine fair competition.
The emphasis in Brussels is on recalibrating ties with China. Observers note that in six years the EU’s trade deficit with China has grown from roughly €140 billion to about €400 billion. The priority is to recalibrate bilateral relations, a goal highlighted as a key objective during Borrell’s planned visit to China in mid-October.
China under the spotlight
In the lead-up to the European elections, Ursula von der Leyen criticized China in her final State of the Union address before the vote. The president of the European Commission condemned subsidies to Chinese companies that have contributed to the decline of European firms, especially in sectors linked to green energy technologies. The EU has signaled it will not disengage from the Chinese economy, but it will seek to reduce the risks associated with it. Brussels plans to investigate China’s illegal subsidies in the electric vehicle sector, arguing that cheap Chinese cars flood world markets because of expansive public subsidies that distort prices. The ambition is clear: promote clean technologies that are produced in Europe, from wind power to steel to batteries and electric cars.
Beijing’s policy framework is not analyzed in isolation. The High Representative notes that a large share of post-pandemic state aid was channeled by Germany. The EU’s approach to protectionism is not new; it traces back to the Trump era, when the United States pursued aggressive protectionist measures. Though some changes occurred under President Biden, the trend of using protectionism alongside broader risk management persisted. The new approach links protectionism to the strategic aim of ensuring raw material security and guarding critical supply chains. This is viewed as protectionism integrated with national economic security.
The Resilience 2030 document, prepared as Spain holds the Council presidency, illustrates how these ideas are being harmonized. It recommends limiting foreign control over strategic industries and highlights the need to diversify supplies of critical materials—ranging from algal proteins to rare earth elements. The plan, drafted by more than 250 experts from all 27 member states with substantial collaboration from the European Commission and the Council of the EU, also calls for tighter checks on foreign influence over digital, energy, and transportation infrastructure. The text reflects an effort to balance openness with safeguards against dependencies.
Guaranteed materials
European negotiators have spent years trying to prevent a repeat of the pandemic’s supply disruptions. They recall moments when a lack of products like masks or even essential medicines highlighted vulnerabilities. The experience emphasized the fragility of global logistics, from congested ports to export controls in other regions. The war in Europe intensified efforts to diversify energy sources, reducing reliance on a single supplier and strengthening strategic reserves. Germany, heavily dependent on Russian gas, sought alternative suppliers to diversify its energy mix and mitigate geopolitical risk.
During this period, the EU pursued agreements with partner nations to secure critical inputs. Engagements with Chile aimed at lithium supplies were complemented by summits with Latin American countries—Argentina, Uruguay, and Chile—focusing on raw materials and energy security. The overarching aim remained clear: reduce exposure to single-country risks while expanding resilient, diversified supply networks. In parallel, negotiations with Mercosur faced obstacles, with France pushing for stricter protections for farmers and crop producers while Brazil faced fewer environmental and health constraints. The tension illustrates the broader balancing act between protectionist instincts and the benefits of open trade.
Risks of overprotection
No policy is cost-free. When one nation increases protection, others often respond with comparable steps. The United States’ Inflation Reduction Act—providing substantial subsidies to green-technology firms—drew a European response, allowing member states to offer similar aid to keep projects from relocating across the Atlantic. Macron has warned that such measures can be destabilizing for Western alliances. The EU’s reaction to the U.S. plan to invest heavily in domestic chip production was to propose a European Chip Law backed by billions in support, reinforcing a transatlantic effort to preserve strategic manufacturing capacity.
The challenge for the EU is that protectionist actions outside its borders can still affect the internal market. İlke Toygür, a geopolitics expert and director at IE University, notes that the EU’s greatest strength lies in its single market, regulatory power, and international connections. If the bloc slides into a cycle of protectionism coupled with economic security, it must weigh the consequences carefully. The current dynamic presents a trinity in China: cooperation, competition, and control. If tariffs or restrictions on technology transfer are used to curb China, climate cooperation could suffer. In the end, the EU might shield its companies while sacrificing a broader public good: the fight against global warming. Citations: IE University analyst insights on European policy strategy and risk management.