| Summary: | Geoeconomic fragmentation (GEF) is becoming entrenched worldwide, and the European Union (EU) is not immune to its effects. This paper takes stock of GEF policies impinging on-and adopted by-the EU and considers how exposed the EU is through trade, financial and technological channels. Motivated by current policies adopted by other countries, the paper then simulates how various measures-raising costs of trade and technology transfer and fossil fuel prices, and imposition of sectoral subsidies-would affect the EU economy. Due to its high-degree of openness, the EU is found to be exposed to GEF through multiple channels, with simulated losses that differ significantly across scenarios. From a welfare perspective, this suggests the need for a cautious approach to GEF policies. The EU's best defence against GEF is to strengthen the Single Market while advocating for a multilateral rules-based trading system
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