German engineering firm braces for impact as US tariff wave hits

(This April 4 story has been refiled to fix the word order in paragraph 16)

LAHNAU, Germany (Reuters) - After 25 years of building industrial equipment in the United States, German engineering firm WIWA faces a dilemma that could completely reshape its transatlantic operations after President Donald Trump implemented sweeping duties on foreign imports.

Though it manufactures many of its high-tech painting and coating products in the United States - a market accounting for a quarter of its sales - a 20% tariff on European goods announced by Trump Wednesday is set to drive up its costs.

"We produce in America for the American market with core components that we export there from Europe. Of course, these are also affected by tariffs," WIWA’s manager Malte Weber told Reuters at its headquarters in the small town of Lahnau, in the German state of Hesse.  

And so the 75-year-old family business, which markets its products as "almost 100% made in Germany", must now decide whether to go all-in to preserve its operations and market in the United States or scale back and hope for better times.  

It’s not alone. 

The U.S. was Germany’s biggest trading partner in 2024, according to the German government’s statistics office, with 253 billion euros ($278 billion) worth of goods exchanged between the two nations. 

Engineering - a sector for which Germany is world renowned - is a big part of that. And many companies, like WIWA, have operations on both sides of the Atlantic. 

In 2024, Germany sold machinery and equipment worth 27.4 billion euros to the U.S., making it the sector’s single-largest foreign market representing 13.7% of total exports, data from VDMA, an engineering industry lobby group, showed.

Those companies are now preparing to take the brunt of Washington’s tariff offensive, with almost 60% of them expecting to be heavily affected by the duties, a VDMA survey found.

A FORK IN THE ROAD

Trump’s stated goal in imposing tariffs is to revitalise the United States’ manufacturing sector and bring back jobs he and his allies say were lost during decades of global trade liberalisation.

Weber thinks he may succeed. But the strategy has forced WIWA to reevaluate. 

"The issue is not easy for us to deal with in the long-term because, of course, the framework conditions can change permanently," he said.

WIWA was committed to staying in the U.S. market and was examining how to do so, including the possibility of ramping up its operations there, Weber said. 

At the same time, however, company executives were also considering increasing their U.S. prices, reducing shipments or even cutting back on investment activity outright.

Despite growing concerns over a deepening trade war that could trigger a global recession, Weber said he was hopeful for a solution and was counting on the European Union to come up with a proper response to the United States soon.

European Commission President Ursula von der Leyen, who called the U.S. tariffs a major blow to the world economy, said on Thursday that the EU was prepared to respond with countermeasures if negotiations with Washington failed.

She said the EU was already finalising a first package of tariffs on up to 26 billion euros of U.S. goods for mid-April in response to U.S. steel and aluminium tariffs that took effect last month.

Whatever the European response ends up looking like, for Weber and his business, the crucial element will need to be clarity on the future, he said.

"I hope that solutions can be found in cooperation with our European partners that can give companies a certain degree of planning security," he said.  

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