Europe squeezed between the US and China – How should companies prepare?
Geoeconomics is rapidly reshaping the global business environment. As the United States and China increasingly use economic tools to pursue strategic objectives, European companies find themselves under pressure from both sides. This blog post summarizes key insights from an Inclus x Economic Security Forum webinar on how companies can understand this shift and build geoeconomic preparedness before pressure turns into disruption.
From geopolitics to geoeconomics
For decades, companies have treated geopolitics as a background condition and economic interdependence as a source of efficiency. That assumption no longer holds. Today, trade, technology, finance, regulation, data, and access to critical inputs are actively used as tools of power.
This shift is often described as geoeconomics. Instead of relying primarily on military force, states increasingly shape the behavior of other countries and companies through markets and economic dependencies. For businesses, this means that access to markets, technology, finance, and ecosystems is becoming conditional rather than automatic.
In the webinar, Mikael Wigell, Founder of the Economic Security Forum, emphasized that geoeconomics operates below the threshold of open conflict. Pressure is often applied quietly, through licensing delays, regulatory interpretations, subsidy conditions, or compliance requirements. From a legal perspective, nothing dramatic may change. From an operational perspective, everything can.
Europe caught in the middle
A central theme of the discussion was Europe’s increasingly difficult position between the United States and China.
On one side, the United States is tightening its geoeconomic approach. Access to US markets, advanced technologies, finance, and industrial ecosystems is increasingly linked to alignment with US rules, standards, and strategic objectives. This pressure is not limited to adversaries. It also applies to allies and to European companies operating globally, often through extraterritorial measures.
On the other side, China remains a critical part of many European value chains. European companies depend on China for raw materials, processing capabilities, specialized components, and market access. Chinese geoeconomic pressure is often selective and opaque, showing up as export licensing delays, regulatory scrutiny, or increased uncertainty rather than explicit bans.
The result is a squeeze. Aligning more closely with the US may reduce some risks, but it can increase exposure to Chinese counter-pressure. Attempting to hedge quietly between systems is becoming harder and can itself trigger scrutiny.
Why there is no neutral position anymore
One of the key messages of the webinar was that companies can no longer assume a neutral operating position. Strategies that were viable a few years ago, such as maintaining parallel exposure to US and Chinese markets without clear alignment, are becoming increasingly difficult to sustain.
Delaying decisions often does not reduce risk. Instead, it can increase accumulated exposure from multiple directions. Economic interdependence itself has become a channel through which pressure is applied, embedded into everyday decisions about sourcing, production, data management, partnerships, and market presence.
This creates a strategic dilemma for companies. Compliance in one system can increase vulnerability in another. There are no cost-free options, only trade-offs that need to be understood and managed deliberately.
Preparedness over prediction
The webinar stressed that geoeconomic preparedness is not about predicting the next policy announcement or headline. It is about avoiding surprise and preserving room for maneuver.
Several practical principles emerged from the discussion:
Map dependencies politically, not only operationally. Companies need to understand not just who supplies a component or service, but who ultimately controls the choke points that make those flows possible.
Focus on signals, not headlines. Major shifts are often preceded by smaller changes in licensing practices, regulatory interpretations, subsidy conditions, or informal signaling.
Identify critical flows. These include physical inputs, technology, software, data, finance, logistics, insurance, and market access.
Build response options early. Once pressure is applied openly, alternatives are limited. Preparedness means creating options before alignment is forced.
Companies that perform well in this environment will not necessarily be the most efficient in a narrow sense. They will be the ones that understand where geoeconomic power intersects with their critical flows and act before that power is exercised against them.
Integrating geoeconomics into corporate strategy
The discussion concluded that geoeconomics needs to be integrated into strategy, risk management, and decision-making at the highest level. Traditional enterprise risk management approaches, which often assume continuity and marginal change, are not sufficient in an environment shaped by strategic economic pressure.
Scenario analysis, stress testing of critical flows, and structured executive-level discussions can help companies move from reactive crisis management to proactive preparedness. The goal is not to eliminate risk, but to understand it early and manage it deliberately.
ESF runs NESPO (the Nordic Economic Security Program) where Inclus serves as the digital collaboration platform. Learn more about NESPO: https://www.economicsecurityforum.org/initiatives