EU Space Act Hurts EU and US Space Sectors While Sparing China, New Analysis Finds

December 3, 2025
Mary Guenther

WASHINGTON — A new analysis by European Economics, commissioned by the Progressive Policy Institute (PPI), finds that the proposed EU Space Act would significantly weaken both the European and American space sectors while leaving China’s rapidly expanding space industry largely unharmed.

The report shows that the initiative would impose substantial new compliance obligations that suppress investment, reduce demand, and undermine innovation across the European market. At the same time, because the United States exports nearly 10 times as many space-related goods to the EU as China does, American firms would face steep new barriers that China would mostly avoid. This analysis supports the arguments presented in PPI’s comments to the European Commission on this initiative, available here.

“This approach harms both sides of the transatlantic partnership just as China is successfully moving toward dominance in space, which has far-reaching implications for broad swaths of modern society,” said Mary Guenther, PPI’s Head of Space Policy. “The EU Space Act burdens Europe’s own companies, hits American firms too, and leaves China with a free pass. That is not a formula for competitiveness or security.”

Key Findings from the European Economics Report:

Effects on the EU space sector

Long-term annual investment in the EU space sector would fall by nearly €3.5 billion.
Demand for EU space products would decline by roughly 5 percent.
R&D spending would fall by 2 to 5 percent as firms scale back amid higher costs.

Effects on the U.S. space sector

The compliance burden on U.S. firms, which export almost ten times more space products to the EU than China does, would reduce global competitiveness.
Long-term revenue losses for the U.S. space sector could reach €85 million annually.

Effects on China

China’s space sector would see minimal impact, despite its state-supported growth and intensifying campaign for global space leadership
By imposing costs on European and American firms while sparing Chinese competitors, the initiative creates a strategic imbalance that aids Beijing’s long-term ambitions. This finding aligns with PPI’s April 2025 report on the modern space race between the United States and China, available here.

Guenther added, “Europe has remarkable potential in the space economy, but this proposal adds red tape without delivering clear benefits. The European Commission should go back to the drawing board to develop an approach that strengthens European innovation and competitiveness while preserving cooperation with allies. Instead, the current framework undercuts the West’s shared leadership and creates openings for China that neither side can afford.”

PPI encourages EU policymakers to eliminate technically infeasible or duplicative rules and to avoid measures that function as de facto barriers for trusted foreign partners. A more flexible approach, backed by several member states, would better support investment and competitiveness across the transatlantic space ecosystem. PPI’s full comments to the European Commission on the EU Space Act, which detail these concerns, are available here.

Read and download the report here.

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us @PPI.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org