Andrei Sterescu

German Chancellor Merz spent the past two weeks travelling first to Beijing and Hangzhou, then heading to Washington a few days later to meet Trump. Merz’s itinerary functions as a crude but accurate map of Germany’s external exposure.

open.substack.com/pub/outsampl...

At the same time, a meaningful share of manufacturing value added in those same activity groups is ultimately absorbed by US final demand, with machinery and motor vehicles doing most of the work and then the wider industrial stack following.

While not the only one, Germany sits awkwardly at the intersection of Chinese competitive pressures and US demand dependence. Regions where industry still anchors the local labour market overlap with the sectors where Chinese import growth into Europe has been strongest.

Many European manufacturing regions also depend heavily on US final demand. For some regions, a significant share of manufacturing value added is ultimately absorbed by the US market through trade and production linkages.

Using regional employment data, the map shows which parts of Europe are most exposed to the rise in Chinese import competition across manufacturing industries. The results highlight the industrial core of Germany and the manufacturing belt of CEE.

The geography of European industry shows how these pressures sometimes overlap. Many of the same regions that anchor Europe’s industrial base sit at the intersection of rising Chinese competition and dependence on US demand.

China is moving deeper into the manufacturing industries where Europe has long specialised, from machinery and industrial equipment to the automotive supply chain. At the same time, the United States remains the single largest external market for European manufacturing.

German Chancellor Merz spent the past two weeks travelling first to Beijing and Hangzhou, then heading to Washington a few days later to meet Trump. Merz’s itinerary functions as a crude but accurate map of Germany’s external exposure.

open.substack.com/pub/outsampl...

Following Sánchez’s criticism of the US-Israeli attack on Iran, and Spain’s refusal to let the US use Spanish military bases for strikes, Trump ordered his administration to cut off all dealings with Spain in retaliation in a press briefing alongside German Chancellor Friedrich Merz.

It was not accountable to domestic stakeholders or to international ones. It was approved neither by Congress, nor by the UN, nor discussed with allies. I find it hard to believe that this is somehow a controversial position.

Sánchez condemned the US-Israel attack on Iran not only because it goes against international law, but because it was a unilateral move that was accountable to no one.

bsky.app/profile/elpa...

Merz is basically saying that certain actions are simply above international law, depending on who carries them out and that they are not accountable to it. That sounds great as long as you are on the side that stands above it.

When asked about Trump’s willingness to cut trade ties with Madrid, Merz said he is trying to convince Spain to meet its NATO spending commitments and that now is not the time to lecture the US and Israel on international law.

Following Sánchez’s criticism of the US-Israeli attack on Iran, and Spain’s refusal to let the US use Spanish military bases for strikes, Trump ordered his administration to cut off all dealings with Spain in retaliation in a press briefing alongside German Chancellor Friedrich Merz.

The national emergency reasoning was weak. But tariffs are politically sticky because they have become a central tool of trade and industrial policy and they now generate large revenues, which gives (some) policymakers a budgetary reason not to give them up.

SCOTUS decided the President cannot impose tariffs under the International Emergency Economic Powers Act. The #tariffs decision doesn’t stop Trump from imposing duties under other laws. While those have more limitations, the tariffs framework could remain largely in place.

Why does the #BoardofPeace banner feature several EU countries, including the EU flag, when the majority of those invited refused membership status and the only EU state to have a head of state present is Romania?

Not to be overly pedantic, but technically the ECB President is appointed by the European Council by QMV based on a recommendation from the Council of the EU, following a consultation with the European Parliament and the Governing Council of the ECB.

Two-speed Europe, coalitions of the willing, core Europe - all different labels currently circling in the debate for same idea that way forward is no longer at EU27.

But the how is important, and I think different people understand different things by the concept.

Quick thread on legal options:

Europe's wage paradox European leaders should find inspiration in Keynes' insight – that the world becomes richer when economies raise productivity and allow wages to keep pace.

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My latest piece was written especially for friends who are EU policymakers or advisors. In it I argue that there is a difference between an inefficient manufacturing sector and a globally uncompetitive manufacturing sector. We shouldn't conflate the two.
engelsbergideas.com/notebook/eur...

…except when they are big enough to force a reaction. Also, what do you do without buy-in from the EU’s biggest states? Half-built arrangements run into the risk of not working out and there’s a big credibility problem too.

Sure, enhanced cooperation in one area might end up being so attractive that others joins as well. But what if, over time, countries invest more attention and resources in these tighter networks, with the others remaining on the margin (thinking here of RO and BG with Schengen)…

Differentiated integration sounds pragmatic, but it could push toward parallel institutions and fragmentation instead of making common ones work. You might just end up with blocks operating under different standards, rules that apply unevenly, and new governance or parallel fiscal facilities.

The ECB’s @isabelschnabel.bsky.social takes a hammer to the myth of eurosclerosis. Europe still delivers very high living standards, strong democratic institutions, and renewed dynamism in parts of Europe. European catastrophising is greatly exaggerated.

giftarticle.ft.com/giftarticle/...

Cool feature. @germnetwork.com is an end-to-end encrypted messenger that’s fully integrated with Bluesky.

Antonio Costa was once a socialist, a shorthand for understanding capitalism first, and then reform/revolution.

this deregulation push is nuts. it wont work, because we are not in the 1990s neoliberalism, but a world of heavy state intervention and transformative ambitions.

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Without that, the debate on a genuine Savings and Investment Union and integrated capital markets risks remaining largely aspirational.

It would also support the euro’s international role. Reserve managers, global banks, and corporate treasuries demand a large stock of safe, liquid euro assets to hold euros at scale. More external demand for euro assets can lower funding costs and increase market depth and liquidity.

A common safe asset would also deliver a shared benchmark yield curve and a euro area risk-free rate, reducing fragmentation in financing conditions and improving the pricing of private risk across borders.