Move to US to avoid tariffs? Not so fast

When President Donald Trump upended global trade in his first term by placing tariffs on goods from China, many companies decided to move production elsewhere to avoid the duties.

- MELISSA EDDY

For one company in Germany, that decision has come back to haunt it.

In 2022, Bizerba, a German maker of industrial scales and slicers with customers around the globe, including the US sandwich chain Subway, broke ground on a factory in Serbia. The strategy was to produce more parts and machines for the US market there, to escape a 25% tariff that Trump had placed on goods made in China.

However, just as the plant became operational this year, Trump imposed a 35% tariff on goods made in Serbia. Now Bizerba is contemplating whether it should move some production to the United States.

"We are now almost at the point where it makes sense to produce certain products directly in the US, instead of trying to find new workarounds," said Andreas W. Kraut, who leads the fifth-generation family-owned company.

Bizerba already ships some parts of the industrial scales and slicers it makes to the United States to be assembled locally for its customers there, which include Subway's nationwide franchises. Like many companies around the globe, Bizerba is faced with either paying the added import taxes or building production lines in the United States and creating a supply chain to support them.

In its trade agreement with the European Union, the United States has imposed a 15% tariff on goods from Europe. Nearly three-quarters of some 3,500 companies polled this month by the German Chamber of Commerce and Industry, known as DIHK, said they were already feeling the negative effects of Trump's trade policy. Still, the US market remains too big for many to quit.

"Despite all of the challenges, the trans-Atlantic market is indispensable for the German economy," Helena Melnikov, the chamber's chief executive, said.