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...

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.

Modern wars are shaped as much by markets and supply chains as by what happens on the battlefield. A conflict can become longer and more dangerous by feeding through oil prices, shipping disruptions, inflation, and bond market stress, especially in a system loaded with debt and fragile investors.

5/ important note: in a high oil price scenario, countries that produce lots of oil are NOT necessarily protected from effects of high oil prices. If your country’s oil industry is a commercial one that is allowed to export & not under heavy state control, yr citizens pay the global price tra la

Europe’s right-wing populists may be personae non gratae among the political establishment back home.

But in the U.S. they are being greeted with open arms and access to the top.
🔗 www.politico.eu/article/maga...

Merz Warns of Economic Damage Due to ‘Endless’ War Against Iran German Chancellor Friedrich Merz warned the US and Israel against waging an “endless war” against Iran that could lead to the disintegration of the whole Middle Eastern state, a new migration crisis i...

Fascinating to watch 🇫🇷, then 🇬🇧, then 🇮🇹, now 🇩🇪 start to acknowledge what 🇪🇸's government recognised from the very start: the Trump-Netanyahu war on Iran is a reckless intervention conducted without regard for rules of war and without a strategy for what comes next.

www.bloomberg.com/news/article...

The US-Israeli attack on Iran, with its destabilising economic & security effects on Europe, just underlines my point: the UK shdn't stay leashed to a dangerously unpredictable US that doesn't even calculate its own interests, let alone ours, before bombing. And the EU wd be stronger with the UK.

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...

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.