To what extent do subsidies reflect not only external protectionism but also geopolitical and market power strategies within the European Union (EU)? Subsidies for import-competing industries have become a prominent policy tool among advanced economies, including the EU, where they are often framed as mechanisms to shield domestic industries from foreign competition. However, we argue that member states strategically use subsidies to bolster their market power within the EU’s single market. We hypothesize that subsidies are frequently allocated to specific firms rather than entire industries. Bypassing collective action problems to lobby for traditional protectionism (Kim, 2017), we expect struggling firms who are market leaders to exploit this and seek protection, especially from the national governments, via subsidies. Economic concentration and electoral institutions in relatively homogeneous sectors lead to collective subsidies (Rickard, 2018). We test whether security concerns play a significant role, with governments more likely to subsidize firms disadvantaged by foreign competition, especially in strategic sectors. We analyze subsidy disbursement patterns among EU member states using the Global Trade Alert dataset on corporate subsidies and firm-level financial data, connecting firms, sectors, and products. Our findings reveal that subsidies impact non-EU competitors, such as China, and intra-EU competition, challenging the notion of a unified European market. Moreover, nearly half of these subsidies are firm-specific, confirming the expected driving role of firms. These results contribute to the literature on the geopolitics of trade and the dual role of EU subsidies in addressing external threats while recalibrating internal power dynamics.