Cost of Decoupling from China Estimated at $23.6 Trillion for US, Europe

A study by EY-Parthenon, cited by the Financial Times on July 13, 2026, projects that if the United States, the eurozone, and the United Kingdom aim to largely eliminate their reliance on China for critical industries and supply chains by 2050, they would need to invest an additional $23.6 trillion** over the next 25 years – approximately **$940 billion annually. The report suggests that rebuilding the manufacturing systems, R&D capabilities, and supply networks currently dependent on China would be not only prohibitively expensive but also nearly impossible to achieve in the short term.

According to the estimates, the United States would need to invest an extra $13.7 trillion**, the **eurozone** **$9.1 trillion, and the United Kingdom about **$800 billion**. On an annual basis, U.S. government and businesses would need to inject roughly $550 billion in new investment each year – a figure comparable to the $600 billion that U.S. tech giants poured into data center construction in 2025. For the EU, such spending would nearly double its annual budget.

Mats Persson, a former advisor to the UK Prime Minister and now a partner at EY-Parthenon, said that reshoring supply chains without imposing excessive costs on taxpayers and consumers would become “one of the most daunting challenges” for governments and companies in the coming years. The study also notes that Chinese-made products typically enjoy a 20% to 100% factory-gate price advantage over comparable goods from the US and Europe. A large-scale shift to domestic manufacturing would thus significantly raise production costs. In Europe, a sharp reduction in reliance on Chinese supply chains could push up prices in key industries by 1% to 2.5%, potentially making it difficult for the European Central Bank and the Bank of England to achieve their 2% inflation targets over the long term.

Alicia Garcia-Herrero, Chief Economist for Asia-Pacific at Natixis, pointed out that even if the US and Europe are willing to pour in enormous funds, it remains unrealistic to truly decouple from China in the short term. The issue is not just about money; China currently holds dominant positions in many critical segments of the industrial chain, including rare-earth processing and active pharmaceutical ingredients, backed by deep industrial infrastructure and supply capabilities. According to International Energy Agency projections, by 2035, China will still supply more than 60% of the world’s refined lithium and cobalt, as well as about 80% of battery-grade graphite and rare-earth materials.

The study concludes that a “full decoupling” from China is unlikely; at best, only a “partial decoupling” can be achieved.