Some European companies wary of expanding in US amid tariff chaos

US President Donald Trump's erratic approach to tariffs is causing some smaller European companies to question the benefits of expanding in the US market - a sign of how tough it has become to navigate trade in the world's top economy. By putting levies on everything from steel and cognac to cars and sandals, Trump aims to prompt foreign firms to move investment to the United States, building new factories and creating thousands of American jobs. While major corporates from the auto and pharma sectors, have rushed to announce expansions or say they are considering them, the stream of announcements, roll-backs and exemptions has left some smaller firms warier of committing.

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Italy's EuroGroup Laminations currently pays no tariffs on the rotors and stators it supplies to US automotive customers, including Ford and GM, from its plant in Mexico as they comply with existing import rules.

But even if it had to, moving production to the US would expose it to tariffs in place on the special type of steel the company uses in its automotive parts, CEO Marco Arduini told Reuters.

"Skipping potential US tariffs ... would not necessarily mean it can compensate for extra costs and low availability of steel," he said, adding that US labour costs, which are up to six times higher than in Mexico, were also an issue.

German fan and motor maker ebm-papst has put on hold plans to build a third US factory or expand one of its existing US sites due to current developments, including the risk that the tariffs will trigger a US recession.

"If there is an economic downturn in the US, demand may develop differently as a result," CEO Klaus Geissdoerfer said.

Small and medium-sized enterprises (SMEs) are the backbone of many economies, including Italy and Germany, both European Union members and major exporters to the United States.