Is Europe’s leadership fit for purpose?

In the global trade competition between the US, China and the EU, the European Commission is coming off worst. Putting it bluntly, the Head of Europe’s civil service – loftily titled the President of the European Commission – doesn’t seem to know what she’s doing. At Turnberry on 27 July 2025, Ursula von der Leyen agreed with Donald Trump that the EU would spend $750bn importing much more expensive US Liquefied Natural Gas and would invest more than $600bn in the US, including the “purchase hundreds of billions of dollars of American military equipment”.

And all this is despite the EU Commission not having funds or powers to buy high priced energy or spend on defence, especially when these total amounts far outstrip anything that the combined 27 EU Member States might need or afford to buy.

China and the US have a plan

Compared with this EU stumbling, both the US and China seem to have a plan – the US with the Trump Cabinet’s MAGA appointees in posts because they will stick to his personal script, and the Chinese because the Communist Party ensures adherence to Ix Jinping’s strategy.

But as Mario Draghi’s September 2024 The future of European competitiveness report points out, “owing to its slow and disaggregated policymaking process, the EU is less able to produce such a response.” The EU legislative process takes an average time of 19 months to agree new laws, from the Commission’s proposal to the signing of any adopted act.

China’s economy has sufficient strength not to be troubled by the Trump tariffs, running what will probably turn out to be more than a $1tn balance of payments surplus. Chinese industry has transformed itself into the most formidable competitor Europe has ever faced in the high-end sector, including innovative machine building and manufacturing capital goods.

Biden’s achievements

Von der Leyen’s lack of economics understanding is only surpassed by Trump. Much of the size and strength of the US economy comes not from Trump but from legislation passed under the Biden administration. Biden’s Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investments and Jobs Act enabled more than $2tn spending and tax incentives over 10 years, with major subsidies for US companies in: semiconductors, clean energy, and electric-vehicle batteries – with 800,000 manufacturing jobs and 15 million jobs in total.

In emasculating these policies, Trump’s One Big Beautiful Bill Act relies on boosting tariff revenue to rebalance the US economy. Trump policies fail to recognise the size and significance of what has been described as the US ‘second China shock’ as portrayed in the New York Times of 14 July 2025. David Autor and Gordon Hanson wrote on the decimation of much US mid-west industry during the ‘first China shock’ during the 1990s and 2000s. This latest Chinese onslaught is “where the United States has long been the unquestioned leader: aviation, AI, telecommunications, microprocessors, robotics, nuclear and fusion power, quantum computing, biotech and pharma, solar, batteries”. This is almost the Chinese version of what Auton and Hanson recommend for the US.

Von der Leyen unpicks her own policies

Meanwhile, Ursula von der Leyen’s EU Commission just keeps bumbling along, busily unpicking a package of Green Deal policies she had previously introduced as part of the EU’s growth strategy. The main purpose of the EU’s Corporate Sustainability Reporting Directive, the corporate sustainability due diligence directive and EU taxonomy for sustainable activities, was to set out reporting requirements for companies to identify and disclose climate and other sustainability risks in their activities and their supply chains and reveal their plans to mitigate against them. If the Commission gets its way, some 45,000 affected companies might be reduced to 1,000, and be exempt from these EU directives.

There is no doubt, as highlighted in Draghi’s competitiveness report, that greater transparency and comparable financial disclosures prompted in these directives seek to reduce the cost of capital and complete the EU Single Market.

Draghi describes the EU as, “the world leader in sustainability and environmental standards and progress towards the circular economy, backed by the most ambitious global targets for decarbonisation.” Support for the EU’s role in low carbon tech comes from significant and reputable sources elsewhere. The Centre for European Reform says, “The EU’s comparative advantages in many LCT (low carbon technology) products show it has the potential manufacturing base to support the green transition at home and to become globally competitive as an exporter.”

On battery production, McKinsey & Company writes, “A recycling target of 80%, as recently specified in the EU battery directive, could become an aspiration for 2030 for all regions globally. “A regulatory shift toward sustainability, which includes new net-zero targets and guidelines, including Europe’s “Fit for 55” program, …the 2035 ban of internal combustion engine (ICE) vehicles in the EU.”

All this shows that the European Commission is ignoring the conclusions of Mario Draghi’s substantial report on competitiveness, which was initiated by Ursula von der Leyen herself, by rejecting the intention and direction of her own Green New Deal Directives and Regulations.

US and China Dumping on Europe

If she survives till the end of her Commission Presidency in 2029, by that time the US and China will be completely dominant and using the EU as their dumping ground.