EU Industry Act: 'Made in Europe' Splits Brussels

A Law with Grand Ambitions

Brussels, February 25, 2026 – After several delays, the European Commission has presented the Industrial Accelerator Act (IAA) – a central project of Commission President Ursula von der Leyen. The law aims to strengthen the competitiveness of European industry, accelerate the decarbonization of energy-intensive sectors, and secure strategic supply chains. However, the draft's release immediately exposed deep divisions within the EU.

What the IAA Envisages

The regulatory framework comprises several core elements: In addition to accelerated approval procedures for decarbonization projects and a CO₂ intensity label for steel and cement, the most controversial point is the introduction of requirements for local production content in public procurement – the so-called 'Made in Europe' criterion.

Specifically, the draft provides for: 70 percent EU value creation for electric vehicles, 25 percent for aluminum, and 30 percent for plastic parts in the construction sector. In addition, a 49 percent cap is to be introduced for investments from third countries in strategic new investments.

Division in Brussels and the Member States

Resistance to the IAA is significant – and comes from several directions. Nine departments within the Commission are said to have expressed fundamental criticism of the draft; the proposal has therefore already been postponed three times. Germany and several Nordic and Baltic states are skeptical of a rigid 'Made in Europe' clause. There are fears of a distortion of the internal market in favor of more industrialized member states. According to information from Euronews, the Commission is leaning towards the German position: European preferential treatment should only apply to partners with comparable procurement rules – i.e., a reciprocal, not protectionist, approach.

The Brussels think tank Bruegel warns of the economic consequences: Local content requirements are prohibited under WTO law, could weaken export-oriented industries, and ultimately slow down the energy transition. As an example, the economists cite that four-fifths of EU battery cell production was established by Korean companies – to the benefit of European car manufacturers.

Consequences for Germany and the Export Economy

For the German export sector, which is particularly dependent on open world markets, the consequences are potentially far-reaching. Higher material costs due to locally sourced inputs could weigh on competitiveness, especially in the automotive, mechanical engineering, and steel industries. Associations also warn of retaliatory measures by important trading partners – a risk that would hit Germany, as Europe's largest exporter, particularly hard.

Resistance is also stirring outside the EU: US Ambassador Andrew Puzder opposed plans to enshrine European preferences in procurement law. The UK also warned of disruptions to established trade relations – London is heavily dependent on EU car markets.

'Made with Europe' as a Way Out?

The Bruegel Institute advocates an alternative: Instead of rigid origin requirements, the EU should rely on global partnerships and only enshrine sustainability and climate standards as procurement criteria. The motto is: 'Made with Europe' – i.e., with European participation, not necessarily produced exclusively on EU territory. According to the economists, this formula would offer a middle ground: strengthening domestic industry without international isolation that would violate global rules.

Whether this line prevails remains to be seen. The IAA will be controversially debated in the European Parliament and the Council in the coming weeks. The rift between free trade advocates and the protagonists of a European reindustrialization runs right through the EU – and Germany is right in the middle of it.