German engine maker Deutz has said it will pass President Donald Trump's tariffs back in full to its American customers through higher prices.
Deutz manufactures engines for construction and agricultural vehicles.
Why It Matters
Trump's reciprocal tariffs came into force overnight on Wednesday. The European Union's (EU) countermeasures, including tariffs, are due in mid-April.
The president sees tariffs as a powerful tool to protect and rebuild domestic manufacturing firms or to force open international markets for them to sell more into.
What To Know
Trump hit the EU, of which Germany is a leading member and its largest individual economy, with a 20-percent tariff.
"It will have the effect that everything will be passed along to customers," Deutz CEO Sebastian Schulte said late on Tuesday, Reuters reported.
Schulte reportedly said that most of its competitors were outside of the U.S. and so would also be impacted by tariffs, meaning it could raise prices for American customers.
A Deutz spokesperson told Newsweek: "We are currently examining the impact of the announced tariffs by the U.S. government. In their current form, rising prices are inevitable.
"We are therefore convinced that fair competition, open markets, and partnership relations with the United States are in the interest of both sides and continue to rely on the U.S. government to strive to maintain a strong and growing economy and an attractive climate for businesses."
Newsweek contacted the media section of the U.S. Trade Representative's Office for comment via email outside of normal business hours.
The comments underscore what many economists have warned about tariffs—that they will drive up inflation because they function as a tax on American consumers.
Higher costs for businesses and consumers threaten to trigger a recession in the U.S., and such fears are driving sharp losses in the stock markets.
Advocates of tariffs say these costs are worth it to rebuild America's manufacturing sector, create high-paying jobs, and keep supply chains secure from a national security point of view.
The best way to avoid the tariffs, Trump has told businesses, is to make goods inside the U.S.
EU officials had suggested sector-specific zero-for-zero tariffs with the U.S., such as in industrial goods and autos, but Trump rejected the idea.
Asked if this was "enough" by a reporter in the Oval Office on Monday evening, Trump replied: "No, it's not."
"The EU has been very tough over the years, I always say it was formed really to do damage to the United States in trade, that's the reason it was formed," Trump said.
The president said the EU is taking advantage of the U.S. through its reliance on American defense spending via NATO and because of the trade deficit.
He wants the European bloc to open its market more to American companies. He sees the current trading relationship as strongly imbalanced in the EU's favor.
"We're paying them to guard them militarily and they're screwing us on trade, so that's not a good combination," Trump said.
Senior European officials are urging their companies not to invest in the U.S. as a consequence of the tariffs, calling for a unified response.
Trump: I'm Defending U.S. From Trade Cheaters
On Tuesday evening, as his tariffs were about to take effect, against a backdrop of sharp stock market losses and rising borrowing costs for the U.S. government, Trump accused America's trading partners of having "cheated."
"I'm proud to be the president for the workers, not the outsourcers," Trump said in a speech to the National Republican Congressional Committee (NRCC) in Washington D.C.
"The president who stands up for Main Street, not Wall Street. Who protects the middle class, not the political class. And who defends America, not trade cheaters all over the globe.
"They're trade cheaters. They cheated on us. They cheated with tariffs on us. They stole our money, they stole our jobs."
What People Are Saying
Robert Habeck, Germany's outgoing economy minister, argued for a united European response, according to Reuters: "The stock markets are already collapsing and the damage could become even greater… America is in a position of weakness."
EU Commission President Ursula von der Leyen said on Monday: "We stand ready to negotiate with the United States. Indeed, we have offered zero-for-zero tariffs for industrial goods, as we have successfully done with many other trading partners. Because Europe is always ready for a good deal, so we keep it on the table. But we are also prepared to respond through countermeasures and defend our interests."
Peter Navarro, White House senior counselor for trade, told Fox News: "I guarantee no recession. Why? Because when we pass the biggest, broadest tax cut in history within a matter of months, that's going to be a great stimulus."
What's Next
The EU is expected to confirm its retaliatory tariff package by mid-April, with preliminary details already circulating among member states.
Industry groups in the U.S. and Europe are lobbying for carve-outs or exemptions, warning that a prolonged tariff exchange could disrupt key supply chains, especially in heavy machinery and automotive sectors.
Future trade negotiations between Washington and Brussels remain uncertain, with both sides sending mixed signals about hardening stances and an openness to making a deal.
