German engine giant Deutz targets US military transport market amid rising tariffs

Deutz, the prominent German engine manufacturer, plans to pass on the costs arising from the high import tariffs recently imposed by the U.S. to its American customers.

Additionally, the company is looking to expand its production of engines designed for military transport, as stated by the company’s CEO, Sebastian Schulte, Caliber.Az reports, referring to German media.

On April 2, U.S. President Donald Trump signed an executive order introducing "reciprocal" tariffs on imports from other countries. The base minimum tariff rate will be set at 10%, with most countries facing increased rates. According to the U.S. Trade Representative’s office, these higher rates were determined based on the trade deficit between the U.S. and each individual country, aiming to address the imbalance rather than sustain it.

Discussing the impact of these new tariffs, Schulte explained, "The immediate consequences of these customs duties will be passed on to (American) clients." He made this statement during a meeting with the Munich Economic Journalists' Club, emphasizing that the burden of these tariffs would ultimately fall on the U.S. customers of Deutz engines.

Deutz manufactures a wide range of engines, including gas, diesel, electric, and hydrogen-powered models. Of the 160,000 engines it produces annually, around 30,000 are exported to the United States. Recently, the company has also started small-scale collaborations with manufacturers of military transport vehicles.

Schulte believes that, in the short term, the tariffs will not negatively affect the company’s sales, noting that products from Deutz’s competitors in the UK and South Korea will also be subject to the same tariff increases. He added that U.S. engine manufacturers would not be able to quickly replace Deutz engines, as doing so would require significant modifications to the construction and agricultural machinery in which Deutz engines are currently used. Furthermore, Deutz has no plans to open manufacturing facilities in the U.S., Schulte clarified.

In the event of a decrease in sales in the U.S. due to the tariffs, Schulte stated that Deutz would focus on expanding its production of engines for military transport. "We intend to continue growing in this area… Essentially, our engines meet military requirements," Schulte concluded, highlighting the company’s commitment to diversifying its production to mitigate potential losses in the U.S. market.