Move production to US to avoid tariffs? There are trade-offs

BALINGEN, Germany – 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.

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

In 2022, Bizerba, a maker of industrial scales and slicers with customers around the globe, including 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 per cent tariff that Mr Trump had placed on goods made in China.

However, just as the plant became operational in 2025, he imposed a 35 per cent 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 Mr 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 US to be assembled locally for its customers there. Like many companies around the globe, it is faced with the choice of either paying the added import taxes or building production lines in the US and creating a supply chain to support them.

In its trade agreement with the European Union, the US has imposed a 15 per cent tariff on goods from Europe. Nearly three-quarters of some 3,500 companies polled in September by the German Chamber of Commerce and Industry said they are already feeling the negative effects of Mr Trump’s trade policy.

Still, the US market remains too big for many to quit.

“Despite all the challenges, the transatlantic market is indispensable for the German economy,” said Ms Helena Melnikov, the chamber’s chief executive.

The US is the most important market for many of Germany’s family-owned companies, the bulk of which are part of the “Mittelstand” of small or mid-sized firms. They face different challenges from those of their larger counterparts, like Volkswagen or Siemens, which are better able to buffer the impact of the upended world economy.

To remain competitive, the family-owned firms will need to adapt their business models, economists said. “This primarily involves adjusting investment strategies and market development approaches,” said chief economist Carsten Wesselmann at Kreissparkasse Koln, a bank in Cologne, Germany. “It requires a high degree of flexibility, foresight and innovation.”

Bizerba employs about 4,500 people around the globe, including about 400 at three US locations. Its annual revenue is about €830 million (S$1.25 billion), and Mr Kraut said roughly a quarter of that came from North America. He was considering moving production there even before the latest round of tariffs.

“Economically, it makes more sense if it’s possible,” he added. “Of course, it always depends on how big the trade-off is.”

On the floor of the factory at the company headquarters, workers build mechanical assembly lines several metres long, testing bright blue conveyor belts stretched above scales that will eventually weigh and wrap portions of cheese, fish or ground meat. They calibrate rapidly rotating arms that will stick labels on the prepared packages as they slide by.

Many of the parts in Bizerba’s machines require steel, and their casings are largely aluminium, meaning that unless those materials are available from providers in the US, the company – like its US counterparts – would still face import taxes of 50 per cent.

“The supplier network and the know-how of the suppliers there must first be upgraded,” Mr Kraut said. “And that takes time.”

Those hurdles are compounded by a nagging fear that the trade deal could still change, which is translating to continued caution by many German executives. An annual survey of 1,000 firms conducted in 2025 by Horvath, a consulting firm based in Stuttgart, found that planned investment in the US did not increase over the last year, despite the increased tariffs.

“As long as US Customs policy remains so dynamic and unpredictable, no company will invest in new US locations solely because of tariffs,” said Mr Ralf Sauter, who led the survey.

It takes at least a year to build a factory, and geopolitics could change in that time, he noted. He added that taking a long view is part of the identity of a family-owned business, along with a strong sense of commitment to its history and location.

Tariffs or no, Mr Kraut said leaving the company’s homeland entirely is not an option. Regardless of the cost, Bizerba’s headquarters, as well as production of the specialised sensors at the heart of every scale it makes, will remain in Balingen, a town in the hills of south-western Germany, where the company was founded 159 years ago.

“It’s simply our core business when it comes to weighing, and that’s where we differentiate ourselves,” Mr Kraut said. He stressed the importance of keeping the technology confidential, which is easier to do at home.

Other products, such as the made-to-order machines that are produced at the company headquarters, will also remain in Germany.

But many of the company’s products sold in the US have to be adapted for the US market. Not only do scales and labels have to be calibrated to the imperial measurement, but Bizerba’s customers also want them to be more robust and very easy to use.

“They have to be as bulletproof as possible,” Mr Kraut said.

Despite the challenges and the uncertainty of the recent months, he added that he is confident that his company will not only survive but also emerge stronger. Resilience for a family-owned company is more than just an attitude – it is part of its DNA, he said.

“We’ve already been through everything,” he noted. “We have already survived two world wars and God knows how many crises. And we will also survive this crisis.” NYTIMES