u.s.-china tariffs threaten european capital goods supply chains
European capital goods began to show the pressure of trade conflicts between Washington and China and other countries, as tariffs pushed up the cost of machine parts and raw materials and had the potential to exacerbate supply bottlenecks.
Machine manufacturers who rely on thousands of small parts from all over the world --
From Husqvarna, Swedish mower manufacturer, to wind-
Siemens Gamesa-turbine manufacturers
Their supply chain has been affected.
Tariffs on exports of cars made directly in the United States to China have risen to 40%, which has raised alarm for profits and rising prices.
But analysts estimate that 65 to 80% of the $34 billion affected goods shipped from the United States to China are not directly sold to consumers, but are key components for other products.
\"Although some \'direction\' financial exposure is very limited, we believe that what makes more sense is the \'indirection\' effect, ben Uglow and Lucie Carrier, capital goods analyst at Morgan Stanley, wrote in a report published this week.
\"So far, most companies have not yet provided detailed information on the risks associated with these tariffs, whether it is the supply chain or direct risk exposure --
We believe this situation is a prominent problem in our industry at present.
\"The investors of European capital goods companies, which have been in the wave of global economic growth, have not really backed down so far. After the U. S.
Tariffs on steel and aluminum were announced in March 8, and investors fled the industrial fund in April.
But they made one.
According to Thomson Reuters Lipper, Mei Kaidu returns. tmsnrt.
In addition, the Dow Jones European industrial goods and services index has outperformed the European stock index by 2% since the latest tariffs were imposed in July 6.
Michael Nicol, European equity investment manager at asset management firm Kames Capital, Scotland, is an exception, and in the past nine months he has significantly reduced his investment in the industrial sector, which is also dueFull valuation.
\"It is not possible to accurately predict the final results of the various proposed tariffs, but for portfolio managers, the specific risks of the market and the stock have obviously increased,\" he said . \".
Morgan Stanley estimates that among European capital goods, machinery, engineering and lighting groups are most vulnerable to tariffs.
It points out the new U of vassilan, Siemens, GEA, Kaiao, IMI, Rotork, Osram, Will, Senvion, Schindler, symbol and Zumtobel. S.
Tariffs impose up to 25% tariffs on 818 Chinese goods, from plastic pipe and connector parts to printed circuit boards and medical imaging equipment.
Morgan Stanley said that the supply of power companies is at the greatest risk because China produces nearly half of the printed circuit boards in the world for computers, Transformers and medical equipment, and is the fifth of all electronic products.
Siemens, the German industrial group, said on Thursday that its customers may slow their spending due to supply problemschain issues.
\"Due to geopolitical tensions in some areas, we see that investment dynamics may be overshadowed,\" Ralf Thomas, chief financial officer, told analysts.
\"The threat of tariffs to free trade is of particular concern.
The links between global supply chains are very tight and it is essential to have reliable framework conditions to promote confidence and economic growth. \"Some companies have begun to show how they deal with the new reality.
Siemens Medical, a medical technology company, is changing its supply route to ship parts from European factories to the United States rather than from Chinese factories to the United States, where final goods are assembled.
\"We have the ability to shift supply from China to the United States through Europe. S. so (that)
We didn\'t see a major impact on the topic of tariffs, \"Chief Financial Officer Jochen Schmitz told reporters on the results call on July 30.
For example, healthcare companies have two places where they produce superconductive magnets used in MRI systems: one in Oxford, England, and one in Shenzhen, China.
Husqvarna is seeking procurement of lawn mower components and engines imported from China and other Asian countries, while food-
GEA, a manufacturer of processing equipment, said it would consider realigning its procurement of Chinese parts used in new equipment and services.
However, the most common response so far is to raise prices, especially in countries that require a lot of steel and aluminum, which has become more expensive in the United States due to tariffs on Chinese and European metals.
Lighting manufacturer Signify, lock manufacturer Assa Abloy, AB Volvo, building equipment and truck manufacturer, Bekaert, wire manufacturer, and Weir, a Scottish engineering company, all said they would adopt this strategy.
Schneider Electric, an electrical equipment manufacturer, pointed out some problems with the shortage of electronic components in its safe power business and predicted that the first additional cost was related to the United States. S.
Tariffs could reach 20 million euros.
\"There is inflation everywhere in our purchases. . .
\"We need to make sure that we absorb the impact of increased tariffs,\" Deputy CEO Emmanuel Babeau told analysts . \".
\"We will further accelerate the price increase.
But this is a dangerous strategy, with the risk of hurting demand.
Siemens Gamesa, who has been hit by a gradual cancellation of government subsidies, said it is unlikely to pass on higher steel costs for wind turbine generators.
Chief financial officer Miguel Angel Lopez told analysts in a earnings call last week: \"We operate in a competitive market . \".
\"The possibility that we turn these effects into prices --
I think the price is very low.