This project studies the European Union's (EU) multilevel implementation of its new green industrial policy (GIP). Our key aim is to explain what factors determine the choice between subsidies and trade restrictions at the national and supranational level as instruments to improve the cost competitiveness of manufacturers of net-zero technologies in the EU. We propose an original political-economic framework that explains instrument choice as a function of the strategic adaptation of policymakers to the strength of concentrated interest groups and to fiscal resource constraints. The research focuses on three pivotal net-zero technologies for which the EU has set ambitious manufacturing targets but that are currently in different competitive positions: wind turbines, batteries, and solar panels. Leveraging a multi-method research design, we analyze how the EU has amended its policy framework for GIP and how instruments are implemented at the national and supranational level, explaining variation between instruments, member states, sectors, and over time. Our findings will contribute to important academic and policy debates about the consequences of the EU’s new GIP for European integration and the green transition.