President Trump has defended his decision to introduce tariffs on goods from other countries by arguing that it will lead companies to shift production to the United States, bringing back jobs.
For German companies, which have been producing their goods in the United States since the late 1800s, such arguments ring hollow. Thousands of German companies already have factories in the United States, accounting for 12 percent of the country’s foreign investments.
Automakers like BMW and Mercedes-Benz have long had plants in the United States. In 2023, the candy maker Haribo opened its first U.S. plant in Wisconsin, after decades of importing its gummy bears.
Many German companies are now calling that strategy into question. Recent surveys indicate that German manufacturers are pulling back from investing in the United States, and those that already have a footprint there are more gloomy about their futures.
The German Chamber of Commerce and Industry regularly polls the 6,000 German companies with U.S. factories to gauge their outlook on the economy. For years, those companies held an “above average” view, said Volker Treier, the head of foreign trade at the chamber. But since Mr. Trump announced the initial round of tariffs on April 2, sentiment has dropped.
“They have fallen against the trend,” Mr. Treier said. “Because tariffs are poison.”
Instead, it appears that many German firms are keeping their investments at home. Only 19 percent of companies in Germany said they were looking to invest in North America, down from 25 percent, according to a separate survey of 216 German financial executives by the consulting firm Deloitte.
German companies also appear to be more willing to invest at home, since a new government under Friedrich Merz was sworn in last Tuesday with a mandate to reduce bureaucracy and bring down energy prices. Many are also hoping to cash in on the 500 billion euros (about $564 billion) the government plans to borrow to invest in infrastructure over the next 12 years.
That excitement could change in the weeks before the 90-day suspension of tariffs ends in July, or if the European Union and Washington are able to reach a trade agreement.
In their first call since Mr. Merz took office, the chancellor and Mr. Trump “agreed to resolve the trade disputes quickly,” Mr. Merz’s office said.
Among the German industries hardest hit by the tariffs was the automotive sector, which has had a significant presence in the United States since the mid-1990s, when BMW and Mercedes-Benz set up plants in the South. Roughly a decade later, Volkswagen followed.
Leaders of the three companies have held talks in Washington, hoping to ease the tariffs. Both Mercedes and Volkswagen, which owns Audi, have said they were considering moving the production of some models to the United States, which the White House celebrated this month as proof that the president’s strategy was working.
Beyond the leading automakers, dozens of smaller German companies produce goods in the United States, contributing to Germany’s overall direct investment there, worth $657.8 billion in 2023. That was more than three times as much as the $193.1 billion that flowed into Germany from American companies in the same year.
That discrepancy is certain to feature in tariff negotiations involving Mr. Merz and Mr. Trump, who has zeroed in on the trade deficit, in which Germany sells more goods to the United States than it buys.
“We have invested more, our companies have created more jobs in the U.S. than American companies in Germany,” Mr. Treier said. “That to me is the most important starting point for when we talk about fairness.”
For German companies, the reason to set up production in the United States has been driven by factors like the ease of market access and a desire to produce locally.
Haribo’s move to Wisconsin was part of a shift to a locally focused strategy, said Christian Bahlmann, a senior vice president at the company. “We are pursuing this long-term plan — regardless of the current customs policy,” he said.
Stihl, a maker of chain saws and other power tools, is based in the southwestern German city of Waiblingen. But for decades, it has run a factory in Virginia.
“We did that in 1974 not because of administrative pressure, but because we believe in local production,” the chairman of Stihl, Michael Traub, told reporters recently, stressing that the move had been based on good business sense, not politics.
That locally focused approach is now helping Stihl to avoid some of the worst effects of Mr. Trump’s import taxes. But the company still relies on batteries and other components that are shipped to the United States from its factories in Europe and Brazil, which means that prices of some items will inevitably go up, Mr. Traub said.
“We will do everything to avoid increasing prices,” he said. “We believe that tariffs are taxes, and at the end of day, our consumers will have to pay them.”
Source: nytimes.com
