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Trump's tariffs set to inflate prices of German imports

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U.S. is Germany's biggest trading partner

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Tariffs risk prolonging Germany's economic recession

By Maria Martinez and Helen Reid

BERLIN, April 11 (Reuters) - In the Barbie movie, the

iconic doll faces a pivotal decision: opt for her trademark but

impractical sky-high stilettos or embrace the down-to-earth

comfort of the quintessentially German Birkenstock sandal?

Now, however, Barbie may have another consideration: price.

U.S. President Donald Trump's sweeping tariffs are poised to

inflate the prices U.S. shoppers pay for many German products -

from Birkenstock sandals to Paulaner beer and Riesling

wine.

Trump's tariff offensive is testing relations between the

two allies, threatening their two-way trade and risking major

damage to an already limping German economy.

And for German companies, it will test whether U.S.

consumers - long willing to pay more for the renowned quality of

the country's goods - can stomach even higher prices at a time

when U.S. policies threaten to spark a recession.

"Both European producers and U.S. consumers will suffer,"

said Rodger Wegner, president of the Association of Exporting

Breweries, which represents German beer brands including

Karlsberg, Lowenbrau and Radeberger.

Germany, like most of the world, is now subject to a 10%

tariff on its exports to the United States. But a 20% rate is

still looming despite a 90-day pause.

The duties could not come at a worse time for Europe's

biggest economy, with economists predicting the trade turmoil

could put it on track for a third year of recession for the

first time in its history.

The U.S. was Germany's biggest trading partner in 2024 with

two-way goods trade totalling 253 billion euros ($277.84

billion).

'A BITTER PILL'

Birkenstock, like many other companies, may pass the cost

onto consumers through price hikes, though it declined to say

whether it planned to when asked by Reuters.

However, even with higher prices, the brand could still have

an advantage as consumers prioritise spending on comfort and

quality, said Jessica Ramirez, co-founder of the retail

consultancy The Consumer Collective.

A weekly survey by industry association Footwear

Distributors and Retailers of America found shoe sales since

Trump's inauguration were down 9.5% from the same period last

year.

Birkenstock, however, said it has not seen any noticeable

change in demand. It produces 95% of its shoes at its own

factories in Germany and said its vertical integration makes it

less exposed to tariffs than peers.

The company said it was pushing ahead with expansion in the

U.S. - a crucial market - despite the current turmoil, with

plans to open up to five more of its own new stores there by the

end of September, for a total of 15.

"We're not going to alter our highly targeted retail

expansion plans due to short-term disruptions," a spokesperson

said.

Whether that strategy pays off will likely come down to

consumers like Clay White.

The software engineer from North Carolina bought his first

Birkenstocks in 2011 and is now on his third pair, but a severe

price spike would make him think twice about buying another.

"If they're going to be ... say over $200, then I would

probably try and find a used pair," White told Reuters. "Or

maybe I would purchase them in Europe."

Birkenstock's bestselling Arizona leather sandals retail for

between $130 and $350.

German brewers are in a similar dilemma. The U.S. is the

third-biggest market for German beer outside the EU.

But production costs have risen sharply in recent years, the

Association of Exporting Breweries' Wegner said, and U.S. beer

drinkers would inevitably have to shoulder the tariff burden.

The U.S. is also the biggest export market for German wines,

with the sector earning around 63 million euros there, about a

sixth of total export sales, data from the German Wine

Association showed.

For Dr. Loosen, a winery in the Mosel region known for

Riesling, which exports a third of its production to the U.S.,

the financial implications of Trump's tariffs appear

unavoidable.

"It will be a bitter pill to swallow," said Thomas Loosen,

the company's co-manager.

($1 = 0.9106 euros)