Cutting the West’s reliance on China would carry a staggering price. A new study puts the cost of decoupling from China at $23.6tn over 25 years, and warns the bill would land hardest on the industries building Europe’s tech future.
The West has spent three years talking about reducing its dependence on China. A new study tries to price it. According to an exclusive report in the Financial Times, the consultancy EY-Parthenon estimates that the US, the eurozone and the UK would need to invest an extra $23.6tn over 25 years to end their reliance on China in critical industries.
That figure covers manufacturing, technology, research, software and the supply chains beneath them. The wider effort to cut dependence on Chinese chips and rare earths has been building across Western capitals for months.
The burden is split unevenly.
The analysis puts the US bill at $13.7tn, the eurozone’s at $9.1tn and the UK’s at $800bn by 2050. Together that is roughly $940bn in extra spending every year. It would sit on top of what these economies already commit to energy, defence and infrastructure.
For the EU, EY-Parthenon says, the annual sum is close to doubling its entire budget.
A bill the size of the AI boom
The figure is easier to grasp against the technology it would help protect. The US share works out at about $550bn a year. That is close to the $600bn that large American tech groups poured into data centres in 2025.
Put another way, unwinding China from Western supply chains would cost roughly as much each year as the entire American AI build-out. And the materials at stake are the same ones that feed chips, electric cars and those data centres.
Why the materials matter
China’s grip is tightest where it is hardest to replace.
The International Energy Agency expects China to supply more than 60 percent of the world’s refined lithium and cobalt by 2035. It puts China’s share of battery-grade graphite and rare earths at about 80 percent. These are the raw inputs for batteries, magnets and semiconductors.
Europe is already staring at a difficult decade for its chip sector, yet the feedstock still runs through Chinese refineries.
The risk is not hypothetical. Last year Beijing imposed export controls on critical rare earth metals after tariff threats from US President Donald Trump. Car production lines in the US and Europe came close to halting before the two sides agreed a truce.
The scare has already pushed the EU towards a rare-earth stockpile and new bets to break China’s grip on chip materials.
The inflation catch
Money alone would not solve it, the report argues. Alicia García-Herrero, chief economist for Asia Pacific at Natixis, says the West cannot decouple quickly even with heavy investment. Beijing controls too many industrial inputs, she notes, from rare-earth processing to the active ingredients in medicines.
EY-Parthenon adds a second problem. Chinese goods often carry a factory price advantage of 20 to 100 percent, so replacing them would push prices up. The firm estimates European critical sectors could see prices 1 to 2.5 percent higher, keeping inflation above the 2 percent targets of the European Central Bank and the Bank of England.
A partial retreat
The authors do not argue for standing still. Mats Persson, a former Downing Street adviser now at EY-Parthenon, says localising supply chains without saddling taxpayers and consumers with prohibitive costs will be one of the biggest challenges of the coming years.
He expects the annual outlay to start smaller and grow as the effort widens.
A full break, he suggests, is unrealistic. A partial one is not. For Europe, the number sharpens a hard choice. Its push for technological sovereignty now carries a price tag, and the bill for the tools it most wants to control runs into the trillions.
