Exactly. For the past decades much of the world was entirely dependent on European products. This gave the EU and European countries enormous leverage in setting standards and enforcing their own regulations across the world. This is very clearly changing, in many areas European companies are depending on Chinese technology (e.g. EV batteries).

I am sure that some part of the EU establishment is aware of this, but the measure taken are practically laughable compared to the magnitude of the problem. At some future point in time dealing with the EU will just not be worth it, as competitive companies outside the EU, not weighed down by EU regulations, will fill the gaps and entering the EU market will be seen as too toxic.