19. 02. 2026
AUTHOR: Neil Makaroff and Tristan Beucler
The European Union is in the midst of an industrial crisis. Volatile energy prices and national fragmentation of the single market are deeply weakening the EU’s competitiveness. Trade wars and overcapacity from China are increasing the pressure. Without a joint industrial policy, EU countries risk seeing their most strategic industries continue to slow production, cancel investments, and relocate their manufacturing to other parts of the world. A European preference is not the whole answer, but it is a beginning to address some of those challenges and secure investments in Europe.
There is widespread speculation that the EU is drifting toward a protectionist industrial policy—one that would close its market and shut out imports. But that narrative bears little resemblance to what the European Commission is actually drafting. Indeed, its upcoming ‘Made-in-Europe’ policy is not about closing off the single market. The objective is far more pragmatic: to rebuild selected strategic value chains and manufacturing capacity within Europe. This is achieved by attaching conditions to the use of public funds, so taxpayers’ money does not subsidise cheaper imports, but instead helps ensure that Europe captures its share of the new industrial era and creates local jobs. In no way does this policy close the market: importers will continue to be able to sell materials and technologies on the European market freely. However, consumers will be incentivised, when public money is involved, to support local value chains for strategic sectors.
This demand support is crucial in the coming years. Europe’s industry is facing a major transformation: European energy-intensive sectors such as steel and chemicals need to decarbonise their processes. At the same time, emerging innovative industries, like batteries, heat pumps, and critical materials recycling, are scaling up their production. Both need significant long-term investments that hinge on predictable demand. Today, the single market does not guarantee this demand due to the high pressure from Chinese subsidised overcapacity entering the EU at an unbeatable price. A Made-in-Europe industrial strategy can secure industries in critical investment phases by providing predictability across the value chain. A harmonised policy applied to each euro of public money spent can ensure that taxpayers’ money boosts the demand for EU-made technologies and products. This policy can apply to renovation schemes for heat pumps, consumer bonuses for electric vehicles, and any other incentive provided through public expenditure.
It does not exclude foreign companies. Quite the opposite, international partners will be incentivised to invest in Europe and build mutually beneficial joint ventures on the continent if they want to access public support. Under the right Made-in-Europe conditions, Europeans will thus be able to learn from Chinese or Korean battery technologies or heat pump manufacturing. New partnerships could emerge on circular business models to recycle permanent magnets, black mass or steel scrap. In other words, a Made-in-Europe policy can benefit both international and local value chains. By reinforcing the EU’s industrial output, it can diversify the global offer of net-zero technologies and materials, creating healthy competition.
The Made-in-Europe agenda is not a bureaucratic dream. It is an industrial strategy supported across Europe’s industry, including by cleantech innovators, the chemical, mining, and steel industries, automotive suppliers, and trade unions. By applying European content criteria pragmatically, the EU can begin to realign its industrial policy with that of its trading partners. From the United States (US) to China, India, Brazil, or Indonesia, local content policies are on the rise in other major economies.
Europe has two options: either follow the industrial policies and trade rules written by others or draft its own. Some of the EU’s international competitors are willing to use their heavily subsidised industry or ample energy reserves to their advantage, weakening our economic security. It was made clear by the US’s aggressive trade policy as well as by China’s export restrictions on strategic resources. The upcoming Industrial Accelerator Act is an opportunity for the European Commission to demonstrate that the single market is more than an open outlet for Chinese overcapacity and American oil and gas. Europe can strategically deploy its market power to support manufacturing on the continent. It combines openness and pragmatism, supports the sectors that need it the most, and incentivises investment into European value chains. The EU’s economy cannot grow, create jobs, and offer Europeans security if it runs solely on American oil and gas and Chinese batteries and wind turbines.
What is at stake is not just another policy framework, but Europe’s ability to compete and shape its own economic future. Only a common industrial policy can answer the EU’s current industrial crisis.
