Overall, decoupling from certain countries may be both politically necessary and economically feasible, at least in the long run. However, a general shift of production back to Europe would be accompanied by significant losses in real income.

While the US has pulled out of the Paris Climate Agreement, the European Union is stepping up its efforts to meet the terms of the accord. The EU has set climate targets in order to reduce global greenhouse gas emissions by 2050 and keep the average global temperature increase below two degree...