Firms bet on know-how to beat tariffs

WHILE Germany’s big companies groan under the US tariff burden, many small and midsize firms, the backbone of Europe’s top economy, are confident their highly-specialised goods will just keep selling.

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The hope is that, in niche areas where American customers have no obvious alternatives, buyers across the Atlantic will just have to accept paying higher prices for their high-tech machines and products.

“The customer in America pays the tariff,” said Thorsten Bauer, co-head of laser maker Xiton Photonics, based in the western city of Kaiserslautern. “We don't notice a thing.”

Bauer's firm of about 20 workers is in this respect typical of the often family-owned enterprises that make up the German “Mittelstand”, Deutsche Bank executive Jan-Philipp Gillmann said.

“German Mittelstand companies are somewhat protected since they are often very specialised, sometimes the only firm that makes a particular part,” said Gillmann, Deutsche Bank’s Head of Corporate Bank Europe.

“The cost of the tariff will often be borne by the consumer.”

Under a framework deal agreed in late July, EU exports are set to face across-the-board US tariffs of 15% from today - higher than traditional duties but much lower than Trump’s threatened 30%.