EU Firms Rethink Supply Chains as Geopolitical Risks Reshape Global Trade

Readiness reaches 73% among the biggest companies, compared with less than half of small and medium-sized enterprises, leaving many smaller businesses less confident about handling future disruptions.

European businesses are changing how they buy, produce, and trade as geopolitical disruption becomes a lasting part of doing business, with a new report showing that companies increasingly favour preparation over emergency responses. The study by the European Investment Bank (EIB) and the European Commission finds that 64% of EU firms consider themselves ready to manage geopolitical risks, though the gap between larger businesses and smaller companies reveals how uneven that readiness remains.

The report, 'Supply chains and the rise of geopolitical risks: EU firms in a fragmenting world', draws on a supply-chain survey of 1,165 EU importers and exporters and an investment survey covering about 12,000 European businesses and 800 US firms. Its findings describe a trading environment where shortages have eased, but tariffs, regulatory demands and uncertainty increasingly shape decisions about suppliers and investment.

Smaller Businesses Face a Preparedness Gap

Readiness reaches 73% among the biggest companies, compared with less than half of small and medium-sized enterprises, leaving many smaller businesses less confident about handling future disruptions. Companies are also moving away from some of the short-term measures used during earlier crises: the share of EU importers adjusting supply chains fell from 50% in 2023 to 37% in 2025, and stockpiling almost halved to 17%.

That shift reflects an effort to make resilience part of everyday planning, with businesses diversifying supply sources and investing in preparedness. Román Arjona, chief economist at the Commission's Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs, described geopolitical uncertainty as a lasting challenge for European companies and stressed the importance of reducing internal barriers and supporting investment in technologies and strategic sectors.

Tariffs Replace Shortages as a Growing Concern

The pressure from physical supply problems has fallen sharply, giving businesses relief from obstacles that previously disrupted production and deliveries. Between 2023 and 2025, the share of EU firms reporting raw-material obstacles dropped from 27% to 8%, semiconductor obstacles declined from 15% to 3%, and logistics difficulties fell from 28% to 12%. Regulatory compliance and tariff concerns have grown, with 20% identifying new regulations as a major obstacle and 18% pointing to customs and tariff changes.

Businesses with links to the world's largest trading powers expect these pressures to persist: 67% of EU firms trading with the United States and 60% trading with China see tariffs as a long-term obstacle. Companies trading only inside the EU have reduced emergency adjustments more sharply, underlining the single market's role in cushioning disruption, and businesses sourcing from outside the bloc continue investing to reduce exposure to future supply problems.

Confidence Holds Despite Costs and Uncertainty

Rising costs remain the most widely reported threat to competitiveness, cited by 74% of EU firms, followed by uncertainty at 61%. Laurent Maurin, head of the EIB's Economic Studies Division, noted that only 21% view supply-chain resilience as a competitive advantage, compared with 78% citing product and service quality and 57% identifying workforce skills. The figures show that businesses still place greater competitive value on what they deliver and the people who deliver it.

Almost 90% expect export performance to stay stable or improve, with exporters serving the US and China expressing less optimism. Advanced digital technologies, research and innovation are becoming more important to businesses' prospects, and the report calls for targeted financing for geopolitical and trade risks, stronger early-warning systems, clearer regulation, progress on trade agreements and deeper single-market integration. It also highlights EIB support for innovation, digitalisation, skills and more resilient supply chains as part of strengthening Europe's ability to compete.