Trump 2.0 – opportunities & strategies for industrial supply chains

Since November 5, 2024, Donald Trump has been confirmed as President-elect of the USA, making him the second US President to serve a second, non-consecutive term in office. His “America First” strategy is based on protectionist trade policies, particularly towards China and Europe. This US economic policy harbors considerable risks for European industry and could fundamentally change trade relations. Experts such as the IFW Kiel and the BDI speak of an “economically difficult moment” and an “epochal change”.

During his first term in office, Trump drove the growth of the US economy through tax reforms, labor market adjustments and deregulation of the energy, agriculture and financial sectors. Together with Biden’s Inflation Reduction Act, he laid the foundations for continued market growth and the renewed attractiveness of the US for foreign investment.

For his second term in office, Trump has announced that he will increase import tariffs on numerous industrial and consumer goods, further reduce corporate taxes and cut energy costs by increasing subsidies for fossil fuels. “America First” will noticeably change access to the US market. At the same time, manufacturing companies worldwide must be prepared for further effects and adjustments.

Trump’s second term will be a challenge for European industry. Companies will have to adapt their supply chain strategy with foresight. However, it also offers the opportunity to benefit from US market growth.

Dr.-Ing. Kai Philipp Bauer, Senior Manager

Export losses due to customs policy

Trump has announced that he will impose 10% import tariffs on EU goods, although individual sectors could be affected by even higher tariffs. This would hit the export-oriented German economy in particular and reduce sales on the US market by around 15% according to estimates. However, the extent to which these import duties will affect the prices of foreign products on the US market depends on the development of the EUR/USD exchange rate, among other things. An appreciation of the US dollar could reduce the impact of import duties if companies conclude their sales contracts in US dollars.

There is also the threat of an economic slowdown in China, as Trump could consider tariffs of up to 60% on Chinese imports, which could also further weaken sales of European industrial goods in China.

The tariff increases threatened by Trump could have a significant negative impact on Germany’s gross domestic product by 2028. Although the economic impact of such measures will be felt by all countries involved, the German economy would suffer more than the US economy in the medium term. Despite an initial decline in economic output, model calculations show that the US economy will recover almost completely by 2028, while Germany would have to accept a significant decline in gross domestic product in the long term. Over the period from 2025 to 2028, the cumulative GDP losses add up to EUR 180 billion(source).

Trump’s volatile trade policy threatens investments, supply chains and prices in Europe and creates additional uncertainty for companies through tariffs, regulation and exchange rate risks.

Dr.-Ing. Oliver Lücke, Senior Advisor

Price erosion for industrial goods in Europe

If Trump increases import tariffs in the USA for certain product groups, affected foreign companies will look for new sales markets to compensate for the losses in US business. Chinese companies in particular could increasingly focus their activities on the European market. Such an oversupply could lower prices for industrial goods in Europe in individual sectors. This would severely affect German industry, which generates around 75% of its sales within the EU (including domestic sales in Germany) and is therefore particularly susceptible to an intensified price war.

Profiting from Trump: Opportunities for European industry

President-elect Trump plans to strengthen domestic production and create new industrial jobs in the US. These plans not only present challenges, but also open up opportunities for European industry.

Tax advantages for value creation and investments in the USA

Trump is aware that foreign investment also plays a decisive role in strengthening US industry. The tax benefits announced are therefore generally aimed at local value creation, so that European industrial companies can also benefit from tax advantages if they relocate production to the US. In addition, government subsidy and support programs for industrial investments are likely to be further improved and made more attractive. Furthermore, simplified bureaucratic procedures and faster approval processes could provide additional incentives to invest in the US market.

Purchasing opportunity China

At this year’s symposium of the German Association of Materials Management, Purchasing and Logistics(BME), there was a consensus among the experts: the expected tariffs under a Trump administration are likely to significantly restrict the US business of Chinese suppliers. The resulting overcapacity in Chinese industry could lead to noticeable price reductions in purchasing in the short term. German industry in particular, which relies heavily on China as a procurement market and has well-organized purchasing teams, could use this development to achieve cost advantages and thereby strengthen its position against its competitors.

Sales opportunities through US infrastructure programs

The infrastructure programs initiated under the Biden administration are likely to be continued or even expanded under Trump. This will create additional sales opportunities for European manufacturers of construction machinery, building materials and tools, provided they have an efficient distribution network and meet the local content requirements that are sometimes demanded. At the same time, new major projects in the areas of transport infrastructure, energy supply and broadband expansion could create additional demand, from which European technology suppliers could also benefit.

Trump’s policy creates opportunities for European companies: Tax benefits, low energy prices, purchasing advantages in China, infrastructure and industrial programs offer potential for investment and growth.

Dr.-Ing. Kai Philipp Bauer, Senior Manager

Expansion and development of US production capacities

Establishing production capacities in the USA enables European companies to benefit from tax advantages and local subsidy programs and to avoid customs duties. Local production strengthens the competitive position and secures market access, especially with increasing local content requirements. At the same time, companies can expand their proximity to important customers and benefit from lower energy costs and political support for domestic industry. This minimizes risks due to trade barriers and creates long-term planning security in the world’s largest single market. Localization requires, among other things, BOM structures that simplify local product specifications and localized procurement.

Competence development in customs and transportation

The targeted development of expertise in customs and transport is a decisive lever for minimizing risks from trade barriers and new regulations. Specialist knowledge of customs procedures, import and export regulations and precise logistics planning can help to avoid potential cost increases due to customs duties and delays. In addition, optimized transport logistics enable supply chains to be secured in the event of global disruptions. Investing in training, digital customs clearance and collaboration with experienced logistics partners boosts operational efficiency and gives companies a competitive edge in an increasingly complex international trade environment.

Cost-cutting programs to combat price wars in Europe

In order to counter the increasing price pressure in Europe, targeted cost-cutting programs can increase competitiveness. Optimizations along the entire value chain, for example through automation or lean management approaches, offer potential savings.

Due to sustained growth, companies have also built up structural costs, which is why a particular focus should be placed on the indirect area. Strategic purchasing advantages due to overcapacity in markets such as China can also be used to source raw materials and preliminary products more cheaply. A clear focus on efficient processes and innovative products strengthens the market position despite tougher competition.

Expansion of supply chain resilience (product, processes, organization)

A resilient supply chain is characterized by flexibility, diversification and robust risk management. Companies should develop alternative procurement and sales markets, build up redundant capacities and digitalize processes. A proactive approach to supply chain planning and optimization increases resilience. By investing in transparent data flows and agile structures, disruptions can be minimized and response times shortened, creating competitive advantages in the long term.

Take advantage of the opportunities and meet the challenges of the new trading conditions with an optimized supply chain. We will be happy to help you develop solutions together that will make your company future-proof.

Dr.-Ing. Kai Philipp Bauer, Senior Manager