EU strategies for reducing dependence on China versus US approaches: Between resilience and protectionism
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Published on: October 15, 2025 / Updated on: October 15, 2025 – Author: Konrad Wolfenstein
EU strategies for reducing dependence on China versus US approaches: Between resilience and protectionism – Image: Xpert.Digital
De-risking or de-coupling? Away from China: Europe's soft approach – or do we have to copy the USA?
A continental attempt at liberation: Can EU companies follow the American model, or does Europe need a different path?
The geopolitical reality of the 21st century presents both the US and the EU with a common problem: economic dependence on China. While both economic powers pursue similar goals—reducing strategic vulnerabilities and strengthening their own economic bases—their approaches differ fundamentally in methodology, scope, and philosophical orientation. This comprehensive comparative analysis examines two fundamentally different strategies for addressing one of the greatest economic policy challenges of our time.
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The transatlantic divide: Two continents, two philosophies
The fundamental commonality between the US and the EU lies in the recognition that the previous globalization strategy has led to one-sided dependencies that entail both economic and security risks. Both economic regions have recognized in recent years that China's state-capitalist system and its increasingly assertive foreign policy necessitate a strategic realignment. Both pursue the overarching goal of making their economies more resilient and securing critical technologies and supply chains.
The overlaps are evident in several areas: Both focus on diversifying supply chains, strengthening domestic production capacities in critical sectors, and developing alternative trade partnerships. Both the US and the EU have launched extensive programs to promote strategic industries – the American CHIPS Act has its European counterpart in the European Chips Act. Both recognize the importance of research and development for long-term competitiveness and are investing heavily in future technologies.
Nevertheless, initial differences are already apparent in the problem analysis. While the US primarily views China as a systemic rival and potential military threat, the EU continues to see the People's Republic as a complex partner that is simultaneously a competitor and a systemic rival. These differing threat perceptions fundamentally shape the respective strategies.
US strategies: The three-pronged approach to breaking free
The American response to dependence on China manifests itself in a coherent, three-pronged approach that relies on massive government intervention. At its core is a combination of nearshoring, reshoring, and friendshoring, underpinned by unprecedented investments in domestic industry.
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Nearshoring
The strategy focuses on relocating production capacity to geographically nearby countries, particularly Mexico. Between January 2023 and August 2024, over 400 investment projects totaling US$170 billion were announced. This strategy leverages existing trade agreements such as the USMCA and benefits from lower transportation costs and cultural proximity.
Reshoring
The goal is to relocate strategically important industries back to the US. The $280 billion CHIPS and Science Act aims to increase semiconductor production in the US fivefold. Similar programs exist for battery technology, rare earth elements, and other critical materials. This strategy deliberately accepts higher costs in exchange for complete control over strategic production capacities.
Friendshoring
It establishes preferential trade relations with democratic partners and allies. This strategy goes beyond purely economic relations and integrates shared values and strategic interests. Partners such as South Korea, Japan, and Australia receive preferential treatment through special agreements.
The American strategy is characterized by its speed, scope, and unilateral focus. Protectionist elements are not only accepted but considered necessary instruments of national security. Tariffs of up to 100 percent on Chinese electric vehicles and massive subsidies for domestic industries illustrate this approach.
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EU strategies: regulation, integration and strategic autonomy
The European response to the China challenge follows a fundamentally different paradigm. Instead of relying on unilateral measures, the EU pursues a multilateral approach based on three pillars: single market integration, regulatory leadership, and diversified partnerships.
Internal market integration
The EU Single Market is at the heart of the European strategy. The new EU Single Market strategy for 2025 aims to make the economic area, encompassing 450 million consumers and 26 million businesses, an even more attractive location. The strategy identifies ten key obstacles for businesses and develops concrete solutions. Of particular importance is the promotion of cross-border cooperation and the improvement of financing options for companies.
Regulatory leadership
This is manifested in groundbreaking legislation such as the Critical Raw Materials Act, the EU Supply Chain Directive, and various cybersecurity regulations. The Critical Raw Materials Act sets ambitious targets for 2030: at least 10 percent of strategic raw materials should be extracted within the EU, 40 percent processed, and 25 percent recycled. At the same time, dependence on individual third countries should be limited to a maximum of 65 percent.
Diversified partnerships
These include both traditional allies and new partners in Africa, Asia, and Latin America. The EU pursues a strategy of “safe-shoring” rather than the American “friend-shoring,” which is more pragmatic and less ideologically driven. Partnerships are developed on the basis of economic complementarity and political stability, not primarily on shared values.
The European approach emphasizes sustainability, legal certainty, and multilateral cooperation. De-risking is preferred over de-coupling in order to maintain important trade relationships while simultaneously reducing vulnerabilities.
American strengths: speed and determination
The US strategy is compelling due to its clarity and speed of implementation. The CHIPS Act was enacted within a few months, from announcement to passage, and is already showing measurable results. Investments in American semiconductor production worth over $200 billion have been announced between 2021 and 2024.
The financial clout of the American approach is impressive. The Inflation Reduction Act alone provides $370 billion for clean energy, while the CHIPS Act mobilizes a further $280 billion. These sums far exceed comparable European programs and make it possible to redirect global investment flows.
The geographical advantages of the US are considerable. The USMCA agreement creates an integrated North American market with over 500 million consumers. Mexico has already replaced China as the US's most important trading partner, demonstrating the effectiveness of the nearshoring strategy.
The US's unilateral ability to act allows for rapid course corrections and clear signals to markets and partners. While the EU requires complex coordination processes among 27 member states, the US can implement new trade policies within weeks.
American weaknesses: costs and isolation
The American strategy comes at a considerable cost. Reshoring leads to significantly higher production costs, which ultimately have to be borne by American consumers. Studies show that production costs in the semiconductor industry in the US are 35-50 percent higher than in Asia.
The shortage of skilled workers represents a critical limitation. The American semiconductor industry will need an additional one million qualified workers by 2030, of whom only a fraction are currently available. Similar bottlenecks exist in other strategic industries.
The protectionist elements of the American strategy jeopardize multilateral trade relations. High tariffs and "Buy American" clauses lead to trade conflicts with allies and can provoke retaliatory measures. The WTO has already ruled several American measures to be in violation of trade law.
The political sustainability of the American strategy is questionable. Changing administrations can bring about fundamental policy shifts, which complicates long-term investment decisions and undermines credibility with international partners.
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Slow but strong: Europe's advantage over the USA
European strengths: sustainability and legitimacy
The European strategy is characterized by its sustainability and multilateral legitimacy. The EU single market, with its uniform rules and legal certainty, remains attractive to international investors. Studies show that the US is now more dependent on EU imports than on Chinese supplies, underscoring the importance of the European market.
The EU's regulatory leadership sets global standards. Laws such as the GDPR, the Digital Markets Act, and the Critical Raw Materials Act are copied worldwide, creating a "Brussels Effect" that gives European standards international validity.
The EU's diversified partnership strategy reduces dependencies more effectively than unilateral measures. Partnerships with countries like Vietnam, India, and various African states create alternative supply chains without the high costs of reshoring.
The EU possesses unique experience in integrating different economies and legal systems. This expertise proves invaluable in building new partnerships and shaping international trade rules.
The European emphasis on sustainability and social standards creates long-term competitive advantages. While American subsidies can create temporary distortions, the EU establishes lasting structures for sustainable growth.
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European weaknesses: slowness and fragmentation
The EU's complex decision-making structures lead to significant delays in policy implementation. While the US passed the CHIPS Act in months, the European Chips Act took several years from its initial announcement to its final adoption.
The EU's limited fiscal capacity compared to the US represents a structural weakness. The EU budget amounts to less than one percent of the member states' GDP, while the US federal government has significantly larger resources at its disposal.
Differing national interests within the EU complicate a coherent China strategy. While Germany focuses on trade, France and Italy favor protectionist measures. This fragmentation weakens the EU's negotiating position vis-à-vis China and other partners.
The EU's dependence on external security guarantees, particularly from NATO, limits its strategic autonomy. In crisis situations, European interests must be balanced against American security policy priorities.
Europe's industrial base is less developed than America's in critical areas. There is a significant lag, particularly in semiconductor production and defense technologies, which cannot be closed in the short term.
Successful application scenarios for the US approach
The American approach proves superior in situations requiring rapid, decisive responses and where national security takes precedence over economic efficiency. This is particularly true for strategic industries such as semiconductors, defense technology, and critical infrastructure.
The American approach is already showing significant success in semiconductor production. Major investments by TSMC, Samsung, and Intel in American production facilities will increase domestic capacity fivefold by 2030. This strategy is particularly effective because the US possesses both leading chip design companies and the necessary technological infrastructure.
In times of geopolitical crisis, the American approach offers greater flexibility. During the COVID-19 pandemic, the US was able to quickly mobilize production capacity for critical goods through the Defense Production Act. Similar mechanisms enable rapid responses to international crises.
The American approach is particularly well-suited to markets with clear technological leaders. In areas such as artificial intelligence, aerospace, and advanced biotechnology, massive government investment can expand existing advantages and create new ones.
The American strategy works well in industries with high economies of scale and low labor intensity. Automated production facilities can compensate for cost disadvantages through higher productivity, while high transportation costs make nearshoring attractive.
Successful application scenarios for the EU approach
The European approach demonstrates its strengths in situations requiring long-term stability, broad legitimacy, and sustainable development. This is particularly true for complex, regulation-heavy industries and global challenges.
The European approach offers clear advantages in the development of sustainable technologies. The European Green Deal and its associated investment programs create a coherent framework for decarbonizing the economy. German companies such as Siemens Energy and Ørsted are already world leaders in offshore wind energy.
The European approach is superior for shaping global standards. The GDPR has established worldwide data protection standards, while the Digital Markets Act influences the behavior of global technology companies. This regulatory power creates lasting competitive advantages without the cost of direct subsidies.
In labor-intensive industries with complex supply chains, the European approach is more cost-effective. The EU Supply Chain Directive establishes uniform standards for human rights and environmental protection, giving European companies a competitive edge in quality-conscious markets.
The European approach proves more effective in developing partnerships with emerging economies. The Global Gateway Initiative mobilizes up to €300 billion for infrastructure investments in Africa and Asia, without the political constraints of American programs.
The European approach offers better support for small and medium-sized enterprises (SMEs). The Enterprise Europe Network and various EU funding programs make it easier for SMEs to access new markets and technologies without making them dependent on large corporations.
Complementary strategies in a multipolar world
The comparative analysis shows that both approaches have their specific strengths and weaknesses and are suited to different challenges. The American approach offers speed and decisiveness in addressing strategic priorities, while the European approach offers sustainability and legitimacy for complex, long-term challenges.
For EU companies, this means that simply copying the American strategy is neither possible nor desirable. European structural conditions – from complex decision-making structures to limited fiscal capacity – necessitate an independent approach. At the same time, individual elements of the American strategy can be adapted and integrated into the European context.
Strengthening the single market remains central for the EU, but can be complemented by selective protectionist measures in critical areas. Regulatory leadership should be expanded to set global standards and combat unfair practices. Partnerships must be more strategically designed without abandoning the openness of the European model.
Ultimately, the analysis shows that in a multipolar world, different models can and must coexist. The American and European approaches are not necessarily competing, but can complement each other in many areas. The challenge lies in leveraging their respective strengths while simultaneously overcoming their structural weaknesses. For the EU, this means forging its own path, one that aligns with specific European circumstances and values, without ignoring the lessons of the American experience.
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