Fragmentation of supply chains and impact on the cost of living

Practical information

1. Composition of the Study Group
2. Administrator / Assistant in charge: Marco RISTORI / Elisabete DIAS

Background Information

Over the past decades, open trade policies fostered growth, reduced poverty, and helped keep prices affordable. Today, however, heightened geopolitical tensions, the drive for green and digital transitions, and the quest for economic security risk undermining these gains.

In response, Europe is exploring ways to safeguard critical value chains and bolster its resilience, with policies like Open Strategic Autonomy and the Economic Security Strategy. While this approach can help mitigate risks and enhance competitiveness in key sectors, it may also introduce unintended costs. Higher tariffs, more complex sourcing, and tighter investment rules can raise prices on essential goods and services, thus intensifying the cost-of-living squeeze - especially for the most vulnerable households.

Balancing the need for secure, resilient supply chains with the imperative of keeping consumer prices in check remains a central challenge. Europe needs targeted strategies, incentives, and policy measures - from support for SMEs to responsible investment and sustainable production - to maintain affordability and protect its industrial base, in an increasingly fragmented global economy.