By Thierry Dime
The European Union’s recent capitulation to Donald Trump’s trade demands is merely the visible epilogue to a silent tragedy that has been unfolding for decades. The deal accepted by Ursula von der Leyen, with its humiliating concessions and $750 billion in US energy purchases, reveals a Europe that has forgotten it was once a power capable of imposing its will on the world. Beneath this diplomatic submission lies a far more dramatic reality.
Behind Brussels’ gleaming façades and the grandiose, reassuring rhetoric about European technological sovereignty, a far darker reality is taking shape. Europe is watching, often in indifference, as its industrial strongholds gradually erode. Sector by sector, the continent is seeing its historic champions lose ground to more agile, better-funded and strategically more coherent Chinese and American rivals. This decline is not unfolding through a spectacular collapse, but through a slow industrial haemorrhage that threatens the economic future of the Old Continent.
The European automotive industry, for example, a century-old flagship of continental expertise, perfectly illustrates this silent drift. While European carmakers struggle to catch up in electrification, their Chinese counterparts are methodically seizing the ground they have lost. BYD has achieved such remarkable growth that it has been named the world’s largest electric car manufacturer. While Tesla has seen its profits fall by 71% in one year, BYD is moving in the opposite direction. The Chinese electromobility giant posted a spectacular 126% increase in net profit, reaching 9.15 billion yuan, or around $1.26 billion, an ascent that reveals the scale of the upheaval under way. Denza, BYD’s new premium brand and the result of an alliance between Mercedes-Benz and BYD, has just arrived in Europe with the ambition of challenging the sector’s benchmarks such as Mercedes, BMW and Porsche. By combining sophisticated design, cutting-edge technology and an aggressive pricing strategy, the manufacturer intends to upend the established order. The first model to lead the charge is the striking Denza Z9 GT, soon to be followed by an SUV and a minivan, symbolising the irony of a Europe forced to ally itself with its future gravediggers in order to survive.
The figures only partly conceal the gravity of the situation. True, the share of Chinese brands in registrations of 100% electric vehicles in Europe is still low, but these headline numbers mask a more complex reality. Chinese carmakers are pursuing a long-term strategy, favouring local industrial deployment over direct exports. This methodical approach will enable them to sidestep European customs barriers while benefiting from local production costs. Meanwhile, Volvo Cars has announced a catastrophic decline in operating profits, collateral damage in a trade war in which Europe is relegated to the role of bystander.
The renewable energy sector reveals another facet of this industrial rout. While Europe prides itself on being a pioneer of the energy transition, it has lost the industrial battle in solar and wind. China’s total installed capacity now stands at 887 GW in solar and 521 GW in wind. The country has already exceeded Xi Jinping’s 2030 renewable energy target, demonstrating an execution capability Europe has lost. This Chinese dominance is not confined to installed volumes; it extends across the entire value chain. European solar panels have virtually disappeared from the global market, replaced by Chinese equivalents that are three times cheaper. European wind turbines, once global references, are now struggling to compete with Chinese giants flooding emerging markets. Europe, which once dreamed of leading the green revolution, is now content to serve as a sales market for Chinese technologies.
The semiconductor sector is no exception and perhaps best illustrates Europe’s strategic myopia. While China bought more than $430 billion worth of semiconductors in 2021 and is developing an ambitious strategy of technological independence, Europe remains a spectator in the Sino-American technology war. Semiconductors are the essential technological foundation of microelectronics. They are used in the manufacture of many electronic products such as smartphones, computers and cars. They are also found in critical sectors including defence and even aerospace technology.
This creeping deindustrialisation has its roots in questionable political and economic choices. Europe’s regulatory obsession, embodied by an all-pervasive bureaucracy, stifles innovation and discourages investment. While China rolls out industrial five-year plans and the United States mobilises hundreds of billions for its industry, Europe multiplies committees, consultations and regulations. The European paradox reaches its peak in energy policy. The continent that champions decarbonisation has become dependent on Russian gas, with imports rebounding in 2024, and then on American gas, while shutting down its nuclear plants. This strategic incoherence leaves a wide opening for competitors that, by contrast, align their energy choices with their industrial ambitions. China is massively expanding renewable energy while maintaining its production capacity, creating a decisive competitive edge. The collapse of European research and development is another alarming symptom. R&D budgets are stagnating, if not falling, while Chinese and American companies are investing heavily in innovation. European talent is migrating to Silicon Valley or Chinese research centres, depriving the continent of its most promising minds. Finally, the excessive financialisation of the European economy is worsening the drift. While German industry declines, London’s financial services thrive on speculation. This premature shift to services is stripping Europe of its industrial base, the indispensable foundation of any lasting economic power.
Europe in 2025 resembles those declining empires that retain their outward splendour even as their foundations quietly crumble. If there is to be a wake-up call, it will require a Copernican revolution in European mindsets. The post-industrial illusion will have to be abandoned, massive reinvestment in industry will have to follow, and technological risk-taking will have to be accepted. That will also mean fundamentally rethinking European governance, replacing a regulatory logic with a strategic and industrial approach. Without such a jolt, Europe will end its historical trajectory as an industrial power that conquered the world before losing itself in its own contradictions.
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