US tariffs push more German firms to move production abroad: survey

BERLIN: US tariff hikes are intensifying pressure on German industry, with roughly two in three manufacturing companies having already moved production abroad or planning to do so in the coming years, a business survey showed on Thursday.

The report, published by consultancy Deloitte and the Federation of German Industries (BDI), found that one-fifth of German companies surveyed have already shifted production facilities abroad, an 8 percentage‑point increase over the past two years.

“Tariff policies are accelerating the relocation of German industry,” the report said.

Among the 148 respondents, 84% are large companies, mainly from Germany’s key industrial sectors such as machinery, automotive and chemicals. The report found that 43% of firms plan to move production facilities abroad within the next two to three years, up from 33% two years ago.

Beyond production, 30% said they intend to move product development abroad over the next two to three years, while 35% expect their research activities to be carried out outside Germany, both up markedly from 2023.

For firms preparing to relocate operations, Europe remains a major destination, accounting for around 30% of planned moves, while Asia is attracting growing interest. About 16% of respondents are considering China and another 19% are looking to other Asian markets, the report said.

“Companies may achieve short-term cost advantages by producing elsewhere, but this does not necessarily make them more resilient,” said Juergen Sandau, a Deloitte supply‑chain expert, warning that potential supply disruptions could quickly erode expected savings.

The report added that mounting protectionism is increasingly undermining companies’ ability to secure their supply chains, while recent tariff policies have also pushed costs higher. Some 53% of respondents reported a moderate rise in supply‑chain costs, and another 39% described the increases as severe or extremely severe.

By RSS/Xinhua