EU's "Buy European" Rules Will Change How Businesses in Italy Compete for Contracts

The European Commission has formally adopted the Industrial Accelerator Act today, a sweeping legislative initiative that will require public procurement and state aid in strategic sectors to prioritize goods manufactured within the EU. The move, heavily promoted by France and codified under the "Buy European" banner, marks Brussels' most assertive step yet toward industrial protectionism in response to subsidies from China and the United States.

Why This Matters

• Manufacturing target: Brussels aims to lift the EU's manufacturing share from 14.3% of GDP in 2024 to 20% by 2035.

• Sector-specific thresholds: Electric vehicle makers must use at least 70% EU-made components (excluding batteries) to access public funding; steel and aluminum projects must incorporate 20% and 25% low-carbon EU content, respectively.

• Foreign investment scrutiny: Any single foreign direct investment exceeding €100M in strategic sectors now faces conditions on job creation, technology transfer, and a minimum 50% European employment requirement.

• Trusted partners list: The Commission will designate certain non-EU countries as "trusted partners" whose components may count toward Made-in-Europe thresholds.

Three Pillars of the New Framework

The Industrial Accelerator Act rests on three interconnected strategies designed to reshape how Italy and other member states allocate taxpayer funds and regulate foreign capital.

Demand Creation Through Public Spending: When national or regional governments in Italy award contracts, conduct auctions, or distribute tax incentives in sectors deemed strategic—steel, cement, aluminum, solar panels, wind turbines, heat pumps, electrolyzers, nuclear components, and electric vehicles—they will be legally obligated to meet minimum EU-content quotas. The Commission's latest draft, reviewed by ANSA, specifies that energy-intensive industries must incorporate at least 20% low-carbon steel and 25% low-carbon aluminum produced within the bloc. For clean-technology projects, a list of core components—from turbine blades to photovoltaic cells—must carry Made-in-Europe credentials.

Accelerated Permitting and Digitization: To prevent regulatory bottlenecks from undermining the competitiveness gains, the Act streamlines authorization procedures and introduces digital platforms for permit applications. This is intended to reduce the months-long delays that have plagued renewable-energy installations and battery-manufacturing facilities across member states.

Conditions on Major Foreign Direct Investment: Any investment above €100M in a strategic sector triggers a compliance assessment if a single third country controls more than 40% of global manufacturing capacity in that field. The investor must demonstrate commitments to high-quality employment, innovation, and value creation within the EU, including technology transfer and a workforce that is at least half European. This provision directly targets Chinese manufacturing dominance in batteries, solar modules, and certain automotive components.

What This Means for Italian Industry

For businesses and policymakers in Italy, the Act translates into both opportunity and adjustment cost. Italian steelmakers operating electric-arc furnaces or investing in hydrogen-based direct-reduction plants will find new revenue streams if they can certify low-carbon credentials; conversely, importers relying on cheaper Asian steel may face higher effective costs when bidding for public contracts or seeking state aid. The same logic applies to Italy's automotive supply chain: tier-one and tier-two suppliers that localize production will gain preferential access to incentives, while assemblers dependent on non-EU parts risk disqualification unless those parts originate from a trusted partner.

Italian renewable-energy developers stand to benefit from the clean-tech mandates. Wind-farm operators and solar-park investors who source turbines and panels from European manufacturers—such as those with factories in Italy, Spain, or Germany—will meet the new criteria automatically. However, projects that locked in Chinese module contracts before today's announcement may need to renegotiate or accept reduced public support.

The Italian government itself will need to revise procurement guidelines across ministries and regional authorities. Tenders for everything from public-building renovations (heat pumps) to electrified bus fleets (batteries, motors) must now embed EU-content checks. This administrative burden is non-trivial but is expected to be eased by the Act's digital permitting tools, which promise harmonized templates and automated compliance dashboards.

Industry Reactions: Cautious Support and Calls for Clarity

Eighteen member states, including Italy, signed a declaration backing the Clean Industrial Deal, the broader policy framework that encompasses the Industrial Accelerator Act. Yet the drafting process was contentious, with Germany pushing for lighter regulation and greater market openness. The final text reflects a compromise that will be further shaped during legislative negotiations in the European Parliament and Council.

CLEPA, the European association of automotive suppliers, described the Act as a "crucial moment" for the continent's car-parts supply chain. The group endorsed local-content thresholds as a necessary counter to unfair competition but warned that the trusted-partners list could dilute the policy's impact if applied too broadly. CLEPA also urged that incentives extend beyond public procurement to all new-vehicle sales, arguing that restricting benefits to government fleets alone would leave the broader market unaffected.

WindEurope welcomed the legislation, highlighting the inclusion of cybersecurity pre-qualification criteria in all wind-power auctions—a provision designed to safeguard critical energy infrastructure from foreign interference. The trade body called for simple, harmonized implementation to avoid creating a patchwork of national interpretations that could fragment the single market.

Italian steel and aluminum producers, represented by industry groups, view the 20% and 25% low-carbon mandates as a lifeline. Over the past decade, the sector has shed thousands of jobs and seen capacity migrate to Asia. The new rules, combined with the Commission's proposal to halve import quotas and raise tariffs on excess steel imports to 50%, aim to stabilize production and underpin a transition to hydrogen-based processes.

International Friction: Transatlantic and Sino-European Tensions

The "Buy European" criteria arrive at a moment of elevated trade friction. The United States has protested vigorously, particularly over parallel "Buy EU" clauses in defense procurement. Washington has threatened to review exemptions for European firms under the Buy American Act and to evaluate contract access on a case-by-case basis. American officials argue that protectionist policies undermine NATO cohesion and violate prior trade commitments. Despite a 2025 framework agreement that reduced tariffs on some industrial and agricultural products, disputes over steel, aluminum, and digital-trade rules persist. The U.S. administration continues to call for deregulation in Europe to attract American investment, while Brussels insists on maintaining regulatory autonomy.

China has adopted a stance of "cautious engagement." Beijing publicly emphasizes the complementary nature of Sino-European economic ties and expresses willingness to expand cooperation. In practice, however, retaliation is already visible: China has launched anti-subsidy investigations into European dairy, pork, and brandy, and imposed tariffs on select milk products in response to the EU's additional duties on Chinese electric vehicles. The Commission has labeled China a "partner, competitor, and systemic rival" and pursues a "de-risking" strategy—protecting critical supply chains without severing trade links. Europe's dependence on China for rare-earth minerals and battery precursors is expected to persist for several more years, complicating efforts to fully localize clean-tech production.

Historical Context: From Free Trade to Strategic Autonomy

The Industrial Accelerator Act marks a departure from the EU's founding ethos of open markets and multilateral trade. Yet protectionist impulses are not new. The Common Agricultural Policy, launched in 1962, used price supports and export subsidies to guarantee food security and farmer incomes, often at the expense of global market distortions. Strategic industrial projects—most notably Airbus—demonstrated Brussels' willingness to nurture champions even when criticized by the International Monetary Fund and World Trade Organization.

Recent years have accelerated this shift. The global trade environment, fragmented by U.S. tariffs and Chinese overcapacity, has pushed the EU toward a more defensive posture. The Act's architects cite the Inflation Reduction Act in the United States and Beijing's massive subsidies for green industries as forcing events. The challenge is to balance protection of strategic sectors—steel, batteries, semiconductors—with the efficiency gains and consumer benefits that open trade delivers. Excessive protectionism risks higher costs for downstream industries, slower decarbonization, and retaliatory cycles that erode multilateral rules.

Implementation Timeline and Political Hurdles

Today's publication starts the clock on legislative review. The European Parliament and member-state governments will negotiate the final text over the coming months. Key variables—exact percentage thresholds, the scope of the trusted-partners list, and enforcement mechanisms—remain fluid. Italy's position will be shaped by its industrial base: strong in automotive components, renewable-energy equipment, and steel, but also reliant on competitive global supply chains for electronics and certain raw materials.

The Italian Ministry of Economic Development and regional authorities will need to translate the Act into operational guidelines, train procurement officers, and establish verification protocols for EU-content claims. Brussels has promised digital tools to streamline this process, but interoperability across 27 national systems is a perennial challenge.

Politically, the Act enjoys backing from a coalition that spans center-right and center-left groups, united by concerns over industrial decline and job losses. Opposition comes primarily from free-market advocates in northern Europe and from industries—such as chemicals and consumer electronics—that depend on cost-effective global sourcing. The final compromise will reflect the relative strength of these factions in the Parliament and Council.

Bottom Line for Residents and Businesses

For Italy-based manufacturers, the Industrial Accelerator Act opens doors to public contracts and subsidies previously accessible to lower-cost foreign competitors. The quid pro quo is demonstrable EU content and, in energy-intensive sectors, certified low-carbon processes. Companies that cannot meet these standards will find themselves priced out of public markets, though private-sector sales remain unaffected for now. Consumers may see modest price increases for products subject to the new mandates—electric vehicles, construction steel, renewable-energy installations—as supply chains adjust and cost advantages from non-EU sources diminish.

Investors should monitor the trusted-partners list: if the Commission designates key allies—potentially the United Kingdom, Norway, or Switzerland—supply-chain disruption may be limited. Conversely, a restrictive list would force rapid reconfiguration and could delay projects awaiting components. The geopolitical dimension cannot be ignored; the Act is as much about economic security and resilience as it is about industrial policy, and its success will hinge on whether Europe can scale low-carbon manufacturing quickly enough to meet its 2035 targets without sacrificing competitiveness or climate ambition.