One of Europe’s biggest farm machinery firms halts US exports over ‘hidden’ tariffs | International trade

One of Europe’s largest agricultural machinery makers, Krone, has been forced to suspend exports of large equipment to the United States due to “alarming” and little-known new tariffs hitting hundreds of products, from knitting needles and hair dryers to combine harvesters.

Among the products on the list of steel derivatives established in consultation with American manufacturers, Donald Trump taxes 407 specific products ranging from tiny embroidered stilettos to kitchen hoods, barbecues, refrigerators, freezers, dishwashers, curling irons, grills, elevators, bridges and railway structures, agricultural equipment and wind turbines.

This means that since August 18, companies such as Krone and construction company Liebherr in Germany must provide customs authorities at borders with an unprecedented level of detail, certifying the origin, weight and value of the steel in their products, down to the nuts and bolts.

“You have to pass documents from supplier to supplier. It’s almost impossible,” said Oliver Richtberg, head of foreign trade at the German engineers’ federation VDMA, one of Europe’s most influential professional organizations.

He described the EU/US trade deal, agreed in July, as “not worth the paper it’s written on”.

“Von der Leyen talks about stability, but for our industry that is not 100% true. The bureaucratic hurdles are so high that some companies have simply stopped exporting to the United States,” Richtberg added.

Krone, headquartered in Lower Saxony in Germany and with 10,000 employees, was among those immediately affected.

Bernard Krone, the company’s fourth-generation chairman, said the new tariffs, which fall outside the EU deal, came as a “big shock” as the US is its second-largest market, worth $130m (£97m) a year.

He said the agreement reached between the EU and the United States in July was “not perfect”, but it offered some predictability until the publication of the list of steel derivatives on August 18.

“This list was very alarming for us. Furthermore, no one could tell us what to do. Did the tariffs depend on the weight, origin or price of the raw steel?” Crown said.

While international headlines have focused on the 15% global tariff agreed by the EU, this separate list of 407 products is a nightmare for exporters because the United States has also set new rules allowing it to be changed several times a year.

To import their machines into the United States, Krone and all other exporters must certify the value and origin of any steel contained in their product.

With as many as 18,000 parts in the supermachines operating some of the world’s largest farms, this proved a challenge for Krone.

And mistakes in paperwork could prove costly.

Flexport, a US logistics and freight company, says the guidelines advise customs authorities to apply the 200% tariff on Russian imports to any blacklisted steel products with “incorrect” documents, withholding refunds until the documents are in order.

Bernard Krone has devoted the last seven weeks to tackling this new subject. In August, it immediately extended its workers’ leave by two weeks, suspending exports to the United States and temporarily suspending production on some lines.

But after weeks of discussions with lawyers on both sides of the Atlantic and U.S. officials, it remains unclear what documents U.S. customs authorities need.

Instead of risking shipping out its largest and most expensive machines, such as forage harvesters which can cost £600,000, the company will in the coming weeks send out a “trial container” of smaller machines with mowers, rakes and tedders, which turn and cut grass to speed up the drying process for making hay.

“This week, maybe next week, we’ll ship them out, and four weeks later we’ll know if we have the necessary paperwork. It’s nerve-wracking,” Krone said.

When asked what his American customers were saying, he said: “A lot of them are surprised. When they saw Mr. Trump talking about tariffs, they had the impression that foreign companies were paying these tariffs, but what they understand now is that the customer pays.”

“If farmers’ prices go up, ultimately it’s the American citizens who frequent Walmart or Target who have to pay more for their everyday products.”

Providing a paper trail that essentially proves to the United States that every nail, nut, or bolt did not come from China is a bureaucratic nightmare.

EU Trade Commissioner Maroš Šefčovič told a conference in Dublin last week that the new documents were “very, very difficult” and he wrote to Commerce Secretary Howard Lutnick to discuss them.

Bernie Hart, vice president of customs and business development at Flexport, says the new requirements are at the “next level” of complexity his company has faced, as they “require new granular data, country of melt and cast (steel) and country of first melt and cast (aluminum), often down to the level of an inventory unit” that can offer tracking details such as color and the size of a product.

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