LONDON — The arithmetic of supply chain independence from China is unforgiving. The United States and Europe would need to spend roughly $23.6 trillion over a decade to meaningfully reduce their reliance on Chinese production networks, according to a study by EY-Parthenon cited by the Financial Times — a figure that exceeds the combined annual output of the European Union.
The research models what genuine supply chain redundancy would require across critical sectors: rare earth processing, semiconductor manufacturing, battery cell production, solar components, pharmaceutical active ingredients, and steel. The $23.6 trillion estimate covers investment in alternative production capacity, new infrastructure, and the transition costs of moving sourcing away from suppliers that have spent three decades accumulating scale advantages Western competitors cannot quickly replicate.
The figure is not a policy proposal. It is a cost ceiling — the theoretical price of a complete decoupling that no Western government has actually proposed. What it clarifies is why none of them have.
The practical alternative, selective decoupling in strategically sensitive sectors while maintaining broader commercial relationships, is the direction both Washington and Brussels have moved since 2022. The operative word in European Union policy is “de-risking” — a term that acknowledges dependency without committing to its elimination. The United States has pursued more aggressive tariff and export control measures, but has not withdrawn from Chinese supply chains for the bulk of manufactured goods its economy relies on.
The gap between those two approaches has become a point of transatlantic friction. European manufacturers with deep integration into Chinese supply chains have resisted American pressure to accelerate separation. The $23.6 trillion figure provides a quantitative argument for that resistance: the cost of the alternative is not just economic disruption, it is a capital demand on a scale that no private market would finance and no public budget would approve.
According to the Financial Times, the EY-Parthenon analysis identifies rare earth processing as among the most capital-intensive dependencies to replicate outside China, which controls a dominant share of global refining capacity for minerals used in electric vehicle motors, defense electronics, and wind turbines. Battery-grade lithium compound processing, pharmaceutical active ingredient manufacturing, and solar-grade polysilicon are other sectors where equivalent Western capacity would require investment running into the trillions per category.
The broader policy context is a shift in how the West characterizes its relationship with China — from “strategic competitor” in diplomatic language to something closer to a structural vulnerability in supply chain terms. The European Commission’s own economic security analysis identified over a dozen strategic dependencies where China holds a dominant or near-dominant market position. The United States National Security Council has produced a parallel assessment. Neither document attached a price tag to simultaneous remediation across all identified dependencies — the EY-Parthenon research is among the first attempts to do so in aggregate.
What neither the study nor the governments it implicitly addresses have resolved is the question of prioritization. Not all dependencies carry the same strategic weight. A solar panel is not a missile guidance component. A pharmaceutical active ingredient that can be sourced from India or domestic producers within five years is a different calculation than a rare earth oxide where China’s processing share exceeds 90 percent with no near-term alternative. The political and strategic challenge is making that distinction at scale, across dozens of sectors, against a China that has shown willingness to use economic leverage in response to political pressure.
The study arrives as the United States and China manage a partial trade truce — tariff reductions exchanged in 2025 reduced some friction, but the underlying competition over semiconductor technology, electric vehicles, and critical minerals has not abated. European governments are simultaneously managing their own trade disputes with Beijing over electric vehicle subsidies while trying to preserve export relationships in other goods. The $23.6 trillion figure lands in a policy environment already struggling with the gap between decoupling rhetoric and decoupling economics.
Whether the figure prompts a recalibration of decoupling ambitions in Brussels or Washington, or functions mainly as validation for the selective, slower approach already under way, will depend on how governments and industries choose to use it. What it does not do is make the choice easier.
