Europe’s trade deficit with China has become a structural industrial problem. In 2025, the EU imported far more from China than it exported, leaving Europe with a massive goods trade deficit of around €360B. Free trade is good for consumers: lower prices, more choice, more competition. But when one side combines state subsidies, cheap credit, cheap energy and industrial overcapacity, the result is not normal competition. It is industrial displacement. Europe has already seen this in solar panels, batteries, electronics, chemicals and increasingly EVs. The answer is not protectionism everywhere. It is strategic realism: → Free trade for normal consumer goods → European production in critical sectors → Public procurement for European strategic industries The cheapest import today can become the most expensive dependency tomorrow.

In 2025, 99% of Sweden’s electricity came from low-carbon sources — the highest share in the EU. Its power system is built on a model Europe should have copied decades ago: → Hydro: ~40% of electricity → Nuclear: ~27% → Wind: ~23% → Fossil fuels: only ~1.2% Sweden combined domestic hydro, nuclear baseload, rapid wind expansion, bioenergy, district heating and electrification. In 2024, Sweden already had the highest renewable energy share in the EU: 62.8% of gross final energy consumption, compared with only 25.2% for the EU average. And in 2025, Sweden doubled down: parliament passed legislation to finance a new generation of nuclear reactors, targeting around 5,000 MW of new capacity, with roughly half expected online by 2035. This is what Europe should have done over the last two decades. (Sweden had a structural advantage: abundant rivers, large hydro resources, low population density and decades of investment in domestic clean power). But the lesson is not only geography. With common debt, larger national investment and coordinated European energy projects, Europe could have moved much closer to real energy sovereignty through renewables, hydro, nuclear, grids, storage and electrification. Instead, much of Europe remained too dependent on external fossil fuels.

The 2022 energy shock massively accelerated nearly every major weakness in the European economic model. Before the war: → ~55% of German gas imports came from Russia → The eurozone ran a current account surplus of roughly ~3% of GDP → Germany’s industrial model depended on cheap imported energy + export manufacturing → Europe imported nearly 60% of its total energy needs from abroad Even in 2025–2026: → EU industrial electricity prices remained over 2x U.S. levels for energy-intensive sectors → The eurozone current account collapsed from a pre-war surplus of roughly ~3% of GDP into near-balance/deficit in 2022, before only partially recovering to ~1.7–2.0% by 2025 → German industry continued facing structural stagnation, weak industrial output and competitiveness pressure Europe’s long-term priority must be energy sovereignty through electrification, renewables, nuclear, storage, hydrogen and pan-European grid interconnections to reduce external energy dependence well below 25% over the next 15–20 years. This is why Europe’s single most important long-term strategic priority is energy sovereignty. There is no more fundamental issue than this.