Current U.S. Tariff Landscape
Since the Trump administration, the U.S. has aggressively used tariffs as an economic strategy, targeting China, the European Union, and other trading partners. While the Biden administration has adopted a more diplomatic approach, Trump imposed significant additional tariffs on critical technologies related to supply chain security and strategic autonomy, particularly on goods such as steel, aluminum, semiconductors, and green technology. European companies exporting to or sourcing from the U.S. now face uncertain cost structures, potential retaliatory tariffs, and longer customs processes.
The Roller Coaster of U.S. Trade Tariffs: Consequences for European Make-or-Buy Decisions
1. Cost calculations and sourcing viability
Tariffs raise the total cost of imported goods and outsourced production, especially when sourcing from the U.S. Consequently, European companies may opt for internal production or nearshoring to mitigate cost volatility.
2. Strategic autonomy and supply chain resilience
U.S. policies increasingly favor domestic production by offering subsidies and requiring local sourcing. These policies encourage European companies to bring production in-house to remain competitive and reduce their dependence on external partners.
3. Compliance and risk management
Tariffs often come with additional regulatory requirements, such as export controls and customs delays. To avoid these disruptions and maintain compliance, companies may favor in-house production within the EU.
4. Supplier network redesign
Established supplier relationships can be destabilized by trade barriers, especially in high-tech and regulated sectors. In response, European companies may diversify or internalize key parts of their supply chains.
5. Long-term investment planning
Tariff uncertainty complicates long-term cost forecasting and ROI calculations for outsourced production models. To mitigate this issue, European companies are investing more in their own production capabilities to ensure stability and strategic flexibility.
Conclusion: From Cost Focus to Strategic Flexibility
Tariffs are no longer just economic tools – they are also geopolitical tools. European companies must now incorporate tariff exposure, trade volatility, and strategic resilience into their traditional cost-based make-or-buy analysis. Although "buy" decisions may offer short-term cost advantages, the current U.S. policy environment increasingly rewards the flexibility, autonomy, and control that are the core benefits of the "make" strategy.
As U.S. trade policy continues to evolve, smart European companies will need to view the make-or-buy decision as more than just an operational challenge; it must also be considered a strategic hedge against global uncertainty.
Nowak, A. / Schöneberger, J.