Europe could fall into ‘dependency trap’ in AI trade with US and Asia, report finds

Europe at Risk of AI Dependency on US and Asia

Europe could fall into dependency trap - A new study warns that Europe might increasingly rely on the United States and Asian economies for critical AI technologies, risking a strategic dependency. The report highlights how the continent’s position in the global AI market is being challenged by the rapid expansion of tech-driven sectors, which are reshaping trade and economic power. As AI becomes central to global operations, Europe’s dependence on foreign infrastructure and capital could weaken its ability to maintain technological independence, especially in light of growing competition from US and Asian players.

Global Economy Shifts Toward AI-Driven Markets

The world economy is pivoting toward industries that fuel artificial intelligence, such as cloud computing and semiconductor manufacturing. Europe is falling behind as these sectors become more dominant, with the US and Asian nations securing significant market share. The report points out that Europe’s role in AI production remains limited, creating vulnerabilities that could be exploited by the leading tech powers. This shift has amplified concerns about the continent’s long-term economic resilience and innovation capacity.

Asia’s Growing Influence in AI Exports

Asia is now the largest producer of AI-related goods, with seven of the top ten exporters hailing from the region. The sector’s value has surged from $1 trillion in 2014 to over $3.8 trillion in 2025, solidifying Asia’s position as a key supplier of technological resources. Europe, however, struggles to compete, as its limited participation in AI manufacturing has left it dependent on Asian components. This imbalance raises alarms about Europe’s ability to sustain itself in the evolving global trade landscape.

Meanwhile, the United States continues to expand its control over AI infrastructure, with nearly half of the world’s data centres located within its borders. This dominance allows American firms to dictate access to essential computing power, reinforcing Europe’s reliance on US-led services. The report notes that European imports in AI-related goods have risen by just 40% since 2023, lagging behind the US’s aggressive investment strategies and Asia’s robust production capabilities. This gap threatens to deepen Europe’s dependency in the years to come.

Europe’s Structural Weaknesses Expose It to Risks

The study identifies structural flaws in Europe’s approach to AI development, including fragmented policies and insufficient funding. Without strong private investment or state-backed support, European companies face hurdles in scaling up AI operations. The report emphasizes that these challenges, combined with regulatory complexities and delays in infrastructure projects, leave the continent at a disadvantage. Europe’s dependence on foreign hardware and services underscores the risk of becoming a passive participant in the global AI economy.

One major concern is the reliance on Asian countries for essential IT equipment. The report states that 57% of Europe’s IT gear and more than half of its data centre hardware originate from five Asian nations—Taiwan, China, South Korea, Malaysia, and Vietnam. This creates a dual dependency, where Europe is tethered to both US and Asian markets. The risk is compounded by the potential for a "US kill switch," which could disrupt cloud services and amplify Europe’s reliance on external suppliers during critical moments.

Local Efforts to Counter Dependency

Despite these challenges, Europe has begun to emphasize its industrial engineering expertise and regulatory frameworks as competitive assets. However, the report argues that these strengths alone may not be enough to offset the continent’s reliance on global AI ecosystems. While some nations are investing in domestic tech infrastructure, the lack of a unified strategy across Europe leaves it fragmented and less prepared for potential disruptions. The findings call for coordinated policies and increased financial backing to reduce dependency and enhance self-sufficiency in AI development.