Citi’s equity team contends that Europe has already advanced a policy toolkit aimed at protecting and reshoring strategic industrial activity, and that markets may be underestimating how far those measures have progressed. Analysts led by Sebastian Satz identify procurement preferences, local-content rules and resilience measures as policies that are likely to be reinforced by stronger trade defence in key industries.
The bank says this policy mix could provide a direct lift to specific industrial sectors. Steel is singled out as showing "the clearest evidence that credible protection can improve earnings and valuation," while autos and chemicals are described as retaining significant policy optionality. Citi lists ArcelorMittal, Volkswagen, Renault, Lanxess and BASF among the companies that could be the clearest beneficiaries of such protection measures.
Beyond those sectors, Citi notes that a broader cycle of strategic-resilience investment could underpin demand for defence contractors, utilities, industrial-equipment suppliers and strategic technology providers. Names the bank highlighted as potential supports for this spending include Leonardo, Rheinmetall, Thales, Vestas, Schneider Electric, EDP, Orsted, TotalEnergies, ASML, BE Semiconductor and ASM International.
To package the theme, Citi introduced a European Autonomy Basket made up of roughly 20 stocks tied to industrial protection and strategic-resilience initiatives. According to the bank, that basket has underperformed the wider European market by about 10% since the start of the Middle East conflict. Despite that relative underperformance, the basket currently trades broadly in line with the market on price-to-earnings ratios while Citi projects its long-term earnings growth to be around 7 percentage points higher than the market.
Citi’s strategists suggest that the shift in policy emphasis forms part of a wider move toward domestic demand as the main growth driver in Europe, with public and private investment spending expected to be among the primary beneficiaries. The team argues that these policy shifts are not yet fully reflected in European equity valuations and could lead to a re-rating of roughly 10%, bringing valuations to about 16 times earnings on a longer-term basis.
The bank also points to structural pressures that it says strengthen the case for policy action. One key datapoint cited is a widening EU-China trade deficit, which Citi reports reached about 98 billion euros in the first quarter of 2026, up from 65 billion euros in the first quarter of 2024. The team also notes falling European industrial capacity utilization, most notably within Germany’s chemical and automotive sectors.
In sum, Citi identifies both near-term and medium-term channels through which targeted policy measures and resilience spending could flow into corporate earnings for select European firms. The bank’s framework isolates steel, chemicals, industrials and autos as nearer-term protection beneficiaries, while defense, utilities and strategic technology sectors could gain from a broader investment cycle that supports resilience and autonomy objectives.
Below are the specific company names Citi flagged as beneficiaries of protection and resilience policy measures: ArcelorMittal, Volkswagen, Renault, Lanxess, BASF, Leonardo, Rheinmetall, Thales, Vestas, Schneider Electric, EDP, Orsted, TotalEnergies, ASML, BE Semiconductor and ASM International.
While Citi offers a thematic investment construct in the European Autonomy Basket and projects higher long-term earnings growth for that grouping, the bank also notes the basket has lagged the broader market in recent months. That juxtaposition underlines the policy and market uncertainty that remains around the pace and extent of policy implementation and the timing of investor re-ratings.