EU Firms Redesign Supply Chains as Geopolitical Risk Becomes the New Normal

Key Takeaways

• Geopolitical Preparedness Varies by Size: 64% of EU firms say they are prepared to manage geopolitical risks, rising to 73% among the largest companies but falling below half among SMEs.
• Supply-Chain Obstacles Are Changing: Raw material, semiconductor and logistics problems have fallen sharply since 2023, while regulatory compliance and tariff concerns have grown.
• Tariffs Are Becoming a Long-Term Concern: 67% of EU firms trading with the US and 60% of those trading with China expect tariffs to remain a lasting obstacle.
• The Single Market Provides a Buffer: Firms trading only within the EU have reduced emergency supply-chain adjustments more sharply, while internationally exposed companies continue diversifying suppliers and markets.
• Export Confidence Remains High: Nearly 90% of EU firms expect exports to remain stable or increase despite higher costs and geopolitical uncertainty.

Deep Dive

The problems that kept European supply-chain managers awake a few years ago have become considerably less troublesome. Raw materials are easier to secure, semiconductors are less scarce, goods are moving, but the trouble has migrated elsewhere.Between 2023 and 2025, the share of EU firms reporting raw materials as a supply-chain obstacle fell from 27% to 8%, according to a new study from the European Investment Bank (EIB) and European Commission. Semiconductor concerns dropped from 15% to 3%, while logistics obstacles fell from 28% to 12%.

In their place are problems that cannot be solved quite so neatly with another supplier or a larger warehouse. Twenty percent of EU firms now identify compliance with new regulations as a major obstacle, while 18% point to changes in customs and tariffs.

The findings, published in Supply chains and the rise of geopolitical risks: EU firms in a fragmenting world, capture a change in the way European businesses are responding to disruption. Geopolitical risk has lasted long enough that many companies no longer appear to regard it as an interruption before normal business resumes. They are building it into the business instead.

Nearly two-thirds of EU firms, 64%, say they are prepared to manage geopolitical risks. Size makes a considerable difference. Among the largest companies, 73% consider themselves prepared. Among small and medium-sized enterprises, fewer than half do.

The report draws on the EIB's latest surveys of supply chains and investment. Its most recent Supply Chain Survey covered 1,165 EU importers and exporters, while the EIB Investment Survey covered about 12,000 European businesses and 800 US firms.

“Geopolitical uncertainty is no longer a temporary shock for European companies,” said Román Arjona, chief economist at the European Commission's Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs. “The encouraging finding is that firms are adapting by diversifying, investing in preparedness and using the single market as a source of stability.”

That adjustment is visible in what companies have stopped doing as much as in what they have started doing. In 2023, half of EU importers were adjusting their supply chains. By 2025, that figure had fallen to 37%. Stockpiling, one of the more immediate responses to shortages and disruption, nearly halved to 17%.

The decline does not suggest companies have lost interest in resilience. Rather, the report finds that firms are relying less on short-term crisis measures as the risks themselves change. Companies exposed beyond the EU continue to diversify suppliers and markets and invest in reducing their vulnerability to future disruption.

Tariffs are particularly difficult to dismiss as temporary. Among EU businesses trading with the United States, 67% expect tariffs to remain a long-term obstacle. Sixty percent of those doing business with China say the same.

The Shelter of the Single Market

Geography matters, also. Businesses trading only within the EU have reduced emergency supply-chain adjustments more sharply than companies exposed to markets outside the bloc. The report points to that difference as evidence of the single market's ability to cushion European businesses from some external disruptions.

Companies sourcing outside the EU have less room for complacency. They continue to invest in measures intended to reduce their exposure to future supply-chain problems, reflecting a trading environment in which the source of disruption is increasingly political or regulatory rather than simply physical.

There is an interesting limit to how companies themselves describe all this. Supply-chain resilience may occupy considerably more attention than it once did, but only 21% of EU firms regard it as a competitive advantage. Seventy-eight percent cite the quality of their products and services, while 57% point to the skills of their workforce.

The threats are more familiar. Rising costs are cited by 74% of EU firms, while 61% identify uncertainty.

“EU firms continue to show resilience in a challenging global environment,” said Laurent Maurin, head of the Economic Studies Division at the EIB. “Just 21% of EU firms view supply-chain resilience as a competitive advantage, compared with 78% that cite product and service quality, and 57% that cite the skills of their workforce.”

For companies, the practical problem is that the supply-chain risks left standing are in some respects harder to isolate. A shortage announces itself rather clearly. A component is unavailable, a shipment is delayed, a factory waits. Regulatory fragmentation and geopolitical exposure work differently. They reach into decisions about suppliers, markets, investment and concentration, and those decisions can remain in place long after the immediate political dispute that prompted them has passed.

European companies are not responding by retreating from international trade. Nearly 90% of EU firms expect their export performance to remain stable or improve, despite higher costs and uncertainty. Companies exporting to the United States and China are less optimistic than the broader group.

Businesses also expect advanced digital technologies, research and innovation to become increasingly important to their competitiveness, putting another kind of investment alongside the less glamorous work of making supply chains harder to disrupt.

The report argues that European policymakers have a part to play as well. It calls for targeted financial instruments addressing geopolitical and trade risks, better early-warning systems, greater regulatory clarity, progress on EU trade agreements and deeper integration of the single market. It also highlights investment in innovation, digitalization, skills and supply-chain resilience.

The distinction running through the findings is an important one. European companies have fewer of the acute supply problems that dominated the early part of the decade, but that has not restored the old assumptions about global trade. The immediate crisis measures are receding because the disruption itself is becoming something companies plan around.

That is a different sort of resilience. It is less about keeping enough inventory on hand to survive the next interruption and more about deciding where a business can afford to depend on a country, supplier or market when the political conditions surrounding that relationship can no longer be treated as background noise.

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