The 15-percent tariffs on exports to the USA that come into effect on Thursday will be tough for many Swedish companies.
One of them is Norden Machinery, with production and over 240 employees in Kalmar. Since the 1930s, the Italian-owned company has been manufacturing machines that fill, for example, toothpaste tubes, medicine packaging, and containers for cosmetics. Exports to the USA account for one-third of the company's turnover.
Of course, the tariffs will sting, both for customers in the USA and for us, says the company's CEO Thomas Johansson, to TT.
Share costs
While customers who are large multinational companies are likely to withstand the blow, it will be worse for medium-sized and smaller family businesses in the USA that now have to pay 15 percent extra for the goods they import, notes Thomas Johansson. Nevertheless, he is not discouraged.
Instead, the company is preparing for a solution where they help the smaller customers by taking part of the tariff cost.
If we, for example, lower the price of a machine by 7.5 percent and the customer pays a 15-percent tariff, it becomes a sharing, reasons Thomas Johansson, but adds that the customer themselves must take the initiative for that discussion.
Common solution
Thomas Johansson is not alone among entrepreneurs in planning for such a deal, according to Michael Koch, head of the Unit for Economic Analysis, National Board of Trade.
Several companies are prepared to worsen their margin to get the price down for the customer, he says.
The tariffs would otherwise mean that the companies' customers in the USA would have to raise the price of the product, which in turn can make sales more difficult.
Of course, the tariffs can reduce profits, but whether they can force Swedish companies to leave the US market, Michael Koch cannot say.
In the long run, you cannot have any level of profitability. Now we have to pay a price to stay on the American market, he says.
Streamline production
Going to meet Trump and moving the company's production to the USA is, however, not something Thomas Johansson has in mind. To offset the loss of profit caused by the tariffs, one must instead streamline production, he believes. Cutting back on staff is not an option, however.
We can reduce costs in other ways, such as changing materials in manufacturing.
