Shifting U.S. trade tariffs are compelling European companies to rethink their make-or-buy decisions. Get to know how these tariffs impact cost structures, supply chain resilience, and long-term strategic planning for European firms.
In an era of geopolitical uncertainty and shifting trade policies, European companies are re-evaluating core elements of their global supply chains, in particular the make-or-buy decision. One of the most influential external factors reshaping this strategic choice is the current ups and downs of U.S. trade tariff policy.
Although tariffs have always played a role in global trade, the recent surge in tariff increases and geopolitical tensions – most notably between the U.S. and China – is now directly impacting how European companies decide whether to manufacture goods internally (make) or source them from third parties (buy), especially when those goods or inputs involve the U.S. market.
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.
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.
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.
