Skip to content
Business — Bank — Industry — Finance — Niegsch — Decrease — Tariffs — Worry

Small and Medium Enterprises (SMEs) in Germany express worry over potential unintended consequences of US tariffs

U.S. tariffs primarily worry German small and medium-sized enterprises about the secondary consequences.

,   and  Administrator
2 min read
Container in Transit Storage Facility in Frankfurt am Main (Germany) Holds Delayed Goods
Container in Transit Storage Facility in Frankfurt am Main (Germany) Holds Delayed Goods

Unveiling the Indirect Woes of US Tariffs for German SMEs

German Medium-sized Businesses Anxious Over Secondary Effects of U.S. Tariffs - Small and Medium Enterprises (SMEs) in Germany express worry over potential unintended consequences of US tariffs

German businesses, specifically SMEs, are concerned about the ripple effects of US tariffs. Companies in the metal, automotive, and machinery sectors, as per a study by DZ Bank, anticipate that their business relations will be impacted negatively by these tariffs. Here's an insightful analysis of the consequences:

Soaring Costs and Diminished Competitiveness

  • The US tariffs on steel and aluminum have led to higher material costs for German metal SMEs. This escalation in cost makes their products less competitive globally and in the US market [3][4].
  • US tariffs on automobiles and auto parts not only affect finished vehicles but also parts suppliers. German exporters of auto parts face potential delays and increased costs, which may strain their partnerships with US manufacturers [2][3].
  • Although not directly targeted, machinery businesses might experience indirect costs due to supply chain disruptions and increased costs of metal inputs.

Supply Chain Chaos

  • The implementation of tariffs can unsettle supply chains, making companies alter their sourcing strategies to bypass tariffs. This modification can create uncertainty for German SMEs that rely on US suppliers or export to the US [4].
  • Delays and increased inventory costs can exacerbate trading partner relations due to decreased reliability and efficiency.

Market Access and Trade Relationships

  • US tariffs might prompt German SMEs to pursue alternative markets, resulting in reduced trade with the US and a shift toward markets like the EU or ASEAN [5].
  • EU countermeasures could lead to retaliatory tariffs, affecting German exports indirectly and complicating trade relationships [1].

Investment Hesitation

  • The uncertainty and volatility caused by US tariffs can dissuade German SMEs from investing in the US or expanding their operations there, similar to other European companies [5].

Semiconductor Supply Chain Turmoil

  • Although not directly linked to metals or automotive sectors, the broader impact of US tariffs on the semiconductor supply chain (as warned by German chip equipment manufacturers) could indirectly affect the machinery sector through component sourcing challenges [4].

In essence, German SMEs in these sectors encounter increased costs, supply chain disruptions, and market access challenges due to US tariffs, which may strain their partnerships with US trading partners and diminish their global competitiveness.

  1. German SMEs particularly in the metal, automotive, and machinery sectors are worried about a decrease in their competitiveness due to the rise in material costs caused by US tariffs on steel and aluminum.
  2. The tariffs imposed by the US on automobiles and auto parts can negatively impact German exporters of auto parts, as they may face potential delays and increased costs, which could strain their relationships with US manufacturers.
  3. Despite not being directly targeted, machinery businesses might experience increased costs and supply chain disruptions due to the US tariffs.
  4. As a result of US tariffs, German SMEs might need to seek alternative markets, such as the EU or ASEAN, which could lead to a decrease in trade with the US and a shift in market focus.

Read also:

    Related

    Latest