Europe used to treat economic policy and foreign policy as separate tracks. That separation is disappearing. In a world defined by rivalry, sanctions, export controls and strategic subsidies, the EU is being pulled into decisions that once belonged to trade ministries and now belong to national security councils.
The pressure is coming from several directions at once. Washington is more willing to use industrial policy to protect its own advantages. Beijing remains a vital trading partner but also a systemic competitor. And within Europe, governments are increasingly prepared to shield sensitive sectors from foreign takeovers, even when that creates tension with the single market’s open logic.
Digital regulation is becoming part of that broader confrontation. Artificial intelligence, data rules and carbon-related trade measures are no longer just technical files. They are points of friction that can provoke retaliation, deepen transatlantic disagreements or force Europe to choose between alignment and autonomy.
For Brussels, the challenge is not whether to defend its interests — it already does that through competition policy, investment screening and subsidies debates. The challenge is how to do so without undermining the openness that made the European economy powerful in the first place. Too much caution risks leaving Europe exposed. Too much protection risks making it slower, more expensive and less innovative.
The result is a new economic model in search of itself. Europe wants resilience, but resilience has a price. It wants competitiveness, but competitiveness now demands state involvement. It wants strategic autonomy, but autonomy requires choices that some member states still resist.
That tension will define the year ahead. Europe’s economic story is no longer just about growth, inflation or industrial output. It is about whether the continent can build a model that survives a world where markets are increasingly instruments of power.
