Krone, an agricultural machine producer considered one of the elite in Lower Saxony, Germany, has paused its U.S. exports. This policy shift follows the recent announcement of new tariffs on steel derivatives. The company, which employs approximately 10,000 people and is chaired by Bernard Krone, a fourth-generation leader, faces significant operational and financial challenges as it navigates these unexpected trade barriers.
The US market is a huge upside potential for Krone – $130 million (£97 million) per year. To counter the project-crippling uncertainty these tariffs created, Krone acted fast. They chose to lengthen staff holidays by two weeks this past August. The company has paused production on certain product lines while it addresses the complexities of compliance with US customs requirements.
Now Krone finds herself in a different fight. They need to give customs authorities unprecedented detail on the origin, weight and value of every piece of steel used in their products. Our company has used the last seven weeks to wrestle with a very juicy challenge. This has required them to really dig into what all the new tariffs mean.
Bernard Krone expressed his surprise at the sudden onset of these tariffs, stating, “That list was very alarming for us. Added to that nobody could tell us what to do. Did the tariffs depend on weight, origin, or the price of raw steel?” Krone is addressing the confusion over compliance by seeking advice from legal experts on both sides of the Atlantic. They are actively engaging with US officials to understand what paperwork is required for customs clearance.
Krone’s advanced and far-reaching super-machine product line encompasses as many as 18,000 intricate parts that create these super MACHINES built exclusively for MASSIVE scale farming operations. A closer look shows that the new tariffs will indeed affect a broad range of products. One of those is forage harvesters, which can be well over £600,000. Krone is committed to keeping their presence felt in the US marketplace even in these stormy seas. To accomplish this, they’ve decided to ship out a “test container” of sorts that’s loaded with smaller machines such as mowers, rakes, and tedders to trial.
The ramifications of these tariffs go far past Krone’s business. American customers are harmed as well. Bernard Krone was surprised to hear the extent that US buyers are surprised by the financial weight that comes with these tariffs. He stated, “Many of them are surprised. When they saw Mr. Trump talk about tariffs, they got the impression that the foreign companies are paying these tariffs, but what they now figure out is that it is the customer who pays.”
Krone is still very much wrestling with these big questions. Not surprisingly, industry observers are watching with great interest to see how the situation plays out and affects the larger agricultural machinery market. To their credit, the company is being proactive – engaging with legal advisors and maintaining strong lines of communications with US officials. This strategy might serve it well to avoid some scrutiny as it continues to progress towards full compliance.