US Tariffs Push More German Firms to Move Production Abroad: Survey

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

According to the report published by consultancy Deloitte and the Federation of German Industries (BDI), 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 percent are large companies, mainly from Germany's key industrial sectors such as machinery, automotive, and chemicals. The report found that 43 percent of firms plan to move production facilities abroad within the next two to three years, up from 33 percent two years ago.

Beyond production, 30 percent said they intend to move product development abroad over the next two to three years, while 35 percent 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 percent of planned moves, while Asia is attracting growing interest. Sixteen percent of respondents are considering China, and another 19 percent 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.

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

Xinhua/RSS