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The packaging industry, particularly the packaging machinery industry, is very concerned about the tariffs announced by US President Donald Trump. These measures could significantly impair the competitiveness of European companies in the important US market and put a strain on trade relations between the US and the EU in the long term.
The following is the latest news on the developments surrounding the announced US tariffs:
„Packaging manufacturers risk market losses“
Three questions for Markus Rustler, Managing Partner of Theegarten-Pactec GmbH, on the tariff plans of the current US President Donald Trump, what threatens the packaging industry in this context and what the consequences are.
What is to be feared with regard to US President Donald Trump's tariff plans?
Markus Rustler: „I think one of the biggest problems is uncertainty. Companies, especially in the capital goods industry with long project lead times, hate uncertainty - and customs announcements that are often made at short notice or are difficult to predict make long-term planning difficult. This can slow down investment and disrupt supply chains.“
What threatens the packaging industry?
Markus Rustler: „Packaging machine manufacturers could experience a decline in sales in the US market, as customers may postpone investments due to the punitive tariffs. Manufacturers of packaging, for example for food or medical products, risk market losses because US companies (have to) switch to local alternatives.“
What are the consequences?
Markus Rustler: „In the medium and long term, we should of course remain in dialogue with our partners in the USA about how to deal with the new situation. In the short term, it is important to ensure that spare and wear parts for installed machines reach the USA at reasonable prices. After all, these cannot usually be substituted locally for specialised machines.“
07.APRIL - 1.05 pm
IPV: Discriminatory attacks on supply chains
Karsten Hunger, Managing Director of the Industrieverband Papier- und Folienverpackung e.V. tells us:
„As the paper and film packaging industry association, we reject any discriminatory attacks on supply chains. We are clearly in favour of free trade! The direct impact of the announced tariffs may be limited for the packaging industry due to the proportionally low volume, but the negative effects on global supply chains and the global economy are far more problematic.
The pandemic and the ongoing war in Ukraine have only recently shown that prosperity and stability are based on global cooperation. We are dealing with a fragile structure here. And we are still looking at an extremely fragile economic situation in Germany. Caution is required here. Trump's „deal policy“ can be poison for this.“
07.APRIL - 13.00 h
ifo: Germany's economic growth below zero?
20 per cent tariffs on almost all goods from the EU: the tariffs imposed by US President Trump could cause massive damage to the German economy in particular. According to initial calculations by the ifo Institute, the new tariffs would reduce GDP by 0.3 per cent this year. Some key sectors such as the automotive and mechanical engineering industries would be particularly hard hit. „As Germany's economy is already stagnating, it is possible that the US tariffs will push economic growth in Germany below zero,“ says ifo President Clemens Fuest.
According to the ifo experts, the German economy is suffering in three ways: firstly, because Germany can export less to the USA. Secondly, because Germany can export less to China due to China's lower competitiveness. Thirdly, because countries such as China will then have to switch more to other export markets, putting German companies under additional pressure.
„The average tariff difference between the US and the EU is only 0.5 percentage points. The fact that additional tariffs of 20% were nevertheless imposed on the EU shows that the US government has arbitrarily set the level of reciprocal tariffs and has also included non-trade aspects such as VAT rates,“ says ifo foreign trade expert Lisandra Flach. „Since such an interpretation of reciprocity is shared by only a few trading partners worldwide, this makes bilateral negotiations with the US government difficult,“ says Flach.
Preparation for trade problems required at an early stage
In November, experts from the ifo Institute had already the potential economic problems, that could result from the election of Donald Trump. The ifo Institute warned that Trump's protectionist agenda with higher import tariffs and greater restrictions on international trade would pose considerable problems for Germany and the European Union.
„If the USA sticks to the announced tariffs, it will be the biggest attack on free trade since the Second World War.“
07.APRIL - 12.45 pm
IW: Trade war would hit Germany hard
A trade war would hit Germany hard, according to calculations by the German Economic Institute (IW). An IW estimate that simulates the new additional tariffs for the most important US trading partners in the Oxford Economics model shows: The cumulative economic damage for Germany could amount to around 200 billion euros over Trump's four-year term in office, and around 750 billion euros for the EU. German GDP in 2028 would be around one and a half per cent lower than without tariffs. The EU should react prudently - but with the necessary rigour, according to the IW.
07.APRIL - 12.30 pm
VDMA: Tariffs cause serious damage on both sides of the Atlantic
VDMA President Bertram Kawlath also commented on the blanket punitive tariffs announced by US President Trump: „The blanket punitive tariffs of 20 per cent on all products from the EU announced by US President Donald Trump are causing damage on both sides of the Atlantic. Punitive tariffs will not solve bilateral trade problems, but will lead to a spiral of isolationism. This is because the EU will probably respond to the US tariffs with counter-tariffs.“ Around 60 per cent of VDMA members confirmed in a survey that they are very strongly or strongly affected by the US punitive tariffs. However, the exact impact on the mechanical and plant engineering sector cannot be estimated at present, according to the association. Kawlath: „Tariffs between the EU and the USA should not be built up, but abolished. Because they harm producers and consumers in both regions.“
BACKGROUND
USA is an important customer for German machines
The USA is a key sales market for German packaging machines. Markus Rustler, Managing Partner of the Dresden-based company Theegarten-Pactec, emphasised in an interview with Deutschlandfunk Nova that around 20 percent of his company's turnover comes from business in the USA. „Export is essential for us. We currently generate 20 per cent of our turnover in the USA,“ explained Rustler. The strong demand from the United States is partly due to the fact that confectionery production has increasingly been relocated back to the USA.
The figures illustrate the industry's dependence: as packaging journal reported last summer, the German packaging machinery industry exported more than 90 per cent of its products abroad in 2023, with the USA being one of the largest markets. This close connection makes the industry particularly vulnerable to trade barriers such as tariffs.
Effects of customs duties on the packaging industry
Donald Trump recently announced a basic tariff of 10 per cent on all imported goods and additional punitive tariffs of 20 per cent on products from the EU. These measures could lead to European machines becoming significantly more expensive in the USA. Markus Rustler explained that his company does not have the profit margin to compensate for these price increases: „Otherwise we would have to sell to the USA at a loss.“ As a result, customers would have to recalculate their projects and planned investments may no longer be realisable.
Spare parts, which are often made of steel and aluminium and are already subject to existing tariffs, are particularly affected. This makes maintenance and servicing considerably more expensive for US customers. Rustler also warned that there are no comparable competitors in the USA that customers could switch to: „They usually come from Europe. Consequently, this will affect our US customers across the board“.
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