Herein lies Europe's true power against China and the USA: its hidden dominance in global supply chains

Not just spectators: How structural dependencies make the EU a global power

In the heated debate about the new world order, Europe is often prematurely dismissed. Between China's aggressive rise and the protectionist course of the USA, the European Union frequently seems to function only as a junior partner or even a geopolitical pawn. But anyone who measures Brussels' influence solely by obvious export statistics or growth rates overlooks a crucial component of the global power architecture.

The European Union possesses a so-called "strategic depth" that remains invisible at first glance, but has the potential to redefine the rules of the game. This is not about the sheer volume of goods leaving our ports, but about indispensable structural dependencies deep within the engine room of the global economy. From highly specialized technologies to essential industrial standards, Europe controls bottlenecks in global supply chains, without which even the superpowers would falter.

This analysis shows why these interconnections are far more than just trade relations: they are potential pressure points that can hit Washington and Beijing where they are most vulnerable – and give the EU far greater geopolitical leverage than is commonly assumed.

The Silent Empire: Why the global trade war cannot be won without Europe's consent

The prevailing narrative about the European economy in recent years has been one of decline and vulnerability. There has been much concern about US digital dominance and China's aggressive industrial expansion, with Europe seemingly caught between these two blocs. Recent geopolitical upheavals, from disrupted supply chains to protectionist measures like the US Inflation Reduction Act, have amplified these anxieties. However, a detailed analysis of global trade flows reveals a more nuanced picture, one often overlooked in public discourse. The European Union possesses a strategic depth in global supply chains that extends far beyond mere export figures. These are structural dependencies that can strike Washington and Beijing where they hurt.

In a remarkable initiative, the European Commission has begun systematically mapping these so-called reverse dependencies. The goal is nothing less than a realistic recalibration of its own geopolitical negotiating power. While China and the US undoubtedly possess powerful leverage in digital platforms, energy, and raw materials, Europe holds the keys to key industrial bottlenecks. This positioning is less obvious, as it is often deeply embedded in upstream and intermediate value chains, but it is absolutely essential for the functioning of the modern global economy. It is becoming clear that globalization is not a one-way street of European dependency, but a complex web in which the EU controls the flow at critical junctures.

The monopoly on technological genesis

When discussing technological sovereignty, the focus is usually on semiconductor manufacturing capacities in Taiwan or South Korea, as well as the design expertise in Silicon Valley. However, the physical production of the world's most advanced microchips hangs by a thread running through Europe. It is one of the most striking concentrations of power in modern industrial history that top-of-the-line chips cannot be produced without extreme ultraviolet lithography (EUV). This technology is de facto controlled by a single European company and its highly specialized supplier network. Without the mirror optics, laser sources, and mechatronic components from Germany and the Netherlands, the factories of TSMC, Samsung, and Intel would grind to a halt.

This technological exclusivity is not a product of chance, but the result of decades of state-supported research and an ecosystem that is difficult to replicate. For years, China has been trying to close this gap with immense capital expenditure, but encounters physical and engineering barriers that money alone cannot overcome. The dependency here is absolute: whoever controls access to these machines determines the pace of global technological progress. This gives Europe leverage that is more precise and effective than broad tariffs. It is a surgical capability for intervening in the industrial base of other major powers. Even the US is not self-sufficient in this area; its ambitions in artificial intelligence and supercomputing are based on hardware that originated in Europe.

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The irreplaceability of specialized production technology

Beyond the semiconductor industry, Europe's influence extends deep into the engine room of the global economy. The term "hidden champion" may sound worn, but it accurately describes niche monopolies. In many areas of specialized mechanical engineering, process automation, and industrial sensor technology, there are no serious alternatives to European suppliers. Whether it's filling lines for the pharmaceutical industry, high-precision tools for the aerospace sector, or complex hydraulic systems for construction machinery – Chinese and American factories often only function because European technology is at work within them.

While China has made significant strides in standard machine manufacturing and displaced Europe in some volume segments, dependence remains in the high-end segment. This is particularly relevant to China's ambitions to modernize its own industry and move up the value chain. Ironically, Beijing needs European technology to achieve long-term independence from Western technology. As long as this transformation process is not complete, the EU possesses leverage. An export ban on certain factory automation components would severely impact entire industrial sectors in China and set projects back by years. US reindustrialization plans also rely on these imports, as the American supplier base has eroded considerably in recent decades.

Molecular dominance and basic chemicals

Another often overlooked sector is the chemical and pharmaceutical industry. This involves not only end products, but also intermediates, catalysts, and reagents that are essential for industrial processes worldwide. The European chemical industry is deeply integrated into global supply chains, providing materials necessary for the production of batteries, solar panels, and advanced composite materials. While China controls many of the mineral raw materials, refining and complex chemical synthesis often still take place in Europe or are based on European patents and process technologies.

This position is particularly relevant in the context of the green transformation. While the US attempts to attract green technologies through subsidies, and China floods the market with finished products, Europe often supplies the essential chemical building blocks. The dependence of US agriculture on European pesticides and seed technologies is another example of this strategic interdependence. It is evident that Europe is at the beginning of many value chains, making a disruption of these supplies systemically risky for the recipient countries. The complexity of these chemical processes acts as a buffer against rapid substitution by competitors.

The normative power of the internal market

Besides physical goods, the European Union exports something perhaps even more powerful: regulation. The so-called Brussels effect describes the phenomenon of multinational corporations adopting European standards to maintain access to the world's richest single market. Since maintaining different product lines for different markets is often too costly, EU rules de facto become global standards. This applies to data protection as well as chemical safety and supply chain legislation.

This regulatory superpower creates a subtle but profound dependency. American tech giants adapt their global algorithms to European standards, and Chinese exporters must align their production processes with EU ESG criteria if they want to continue selling in Europe. This forces Washington and Beijing to indirectly play by European rules. In a world where standards are increasingly used as geopolitical weapons—for example, in defining norms for 6G or artificial intelligence—the EU's ability to shape markets through regulation is a central component of its economic security architecture. It is a form of soft power with hard economic consequences.

From naivety to strategic realism

The recognition of these strengths is leading to a paradigm shift in Brussels and the European capitals. For a long time, the EU saw itself as a pure advocate of free trade, viewing economic integration as a guarantee of peace. Today, this integration is increasingly being viewed in terms of military capability. The new Anti-Coercion Instrument is the legislative expression of this new self-confidence. It allows the EU to take targeted countermeasures when a member state is subjected to economic pressure.

Mapping reverse dependencies provides the necessary target data for this instrument. Instead of using a shotgun in a trade war, Europe can now employ a scalpel. If, for example, China restricts exports of gallium or germanium, the EU now knows more precisely where a counterattack in the supply chain for lithography machines or specialty chemicals would hurt Beijing the most. This primarily serves as a deterrent. The goal is not decoupling, but rather restoring a balance of power at the economic level.

The analysis clearly shows that the narrative of a weak Europe does not stand up to empirical scrutiny. The EU is not a pawn of the superpowers, but an independent entity with considerable veto power in the global economy. The challenge now lies in translating this latent influence into a coherent political strategy that goes beyond unilateral national actions. The world's dependence on Europe is real, profound, and embedded in the most critical technologies of our time. It is now up to European policymakers not only to possess this advantage, but also to play it credibly when necessary.

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