Europe Faces Industrial Decline Amid US-China Tensions

Published on April 13, 2026

For years, Europe and the United States enjoyed a strong partnership, underpinned interests and economic collaboration. Both regions relied on this alliance to foster innovation and growth within their industries. However, growing geopolitical tensions are starting to unravel this longstanding relationship.

The deterioration accelerated during the Trump administration, marked criticism aimed at NATO allies. European leaders now find themselves at a crossroads: should they wait for a turnaround in US policy, or pivot towards China, a move that could have dire consequences for their industries?

In a recent discussion hosted on Foreign Relations, Gina Raimondo, former commerce secretary and a current Distinguished Fellow, highlighted the risks of such a shift. She warned that European industry is increasingly at risk of being “hollowed out” . Raimondo also expressed concerns regarding the legacy of the CHIPS Act and the potential for AI to cause mass unemployment, destabilizing democratic processes.

The implications of these developments are significant. European industry faces a steep decline, potentially losing its competitive edge. As economic ties fray, the region’s reliance on American support wanes, prompting it to reconsider alliances that could shape its future and security landscape.

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