By Maria Martinez and Helen Reid
BERLIN (Reuters) – In the Barbie movie, the iconic doll faces a pivotal decision: opt for her trademark but impractical sky-high stilettos or embrace the down-to-earth comfort of the quintessentially German Birkenstock sandal?
Now, however, Barbie may have another consideration: price.
U.S. President Donald Trump’s sweeping tariffs are poised to inflate the prices U.S. shoppers pay for many German products – from Birkenstock sandals to Paulaner beer and Riesling wine.
Trump’s tariff offensive is testing relations between the two allies, threatening their two-way trade and risking major damage to an already limping German economy.
And for German companies, it will test whether U.S. consumers – long willing to pay more for the renowned quality of the country’s goods – can stomach even higher prices at a time when U.S. policies threaten to spark a recession.
“Both European producers and U.S. consumers will suffer,” said Rodger Wegner, president of the Association of Exporting Breweries, which represents German beer brands including Karlsberg, Lowenbrau and Radeberger.
Germany, like most of the world, is now subject to a 10% tariff on its exports to the United States. But a 20% rate is still looming despite a 90-day pause.
The duties could not come at a worse time for Europe’s biggest economy, with economists predicting the trade turmoil could put it on track for a third year of recession for the first time in its history.
The U.S. was Germany’s biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($277.84 billion).
‘A BITTER PILL’
Birkenstock, like many other companies, may pass the cost onto consumers through price hikes, though it declined to say whether it planned to when asked by Reuters.
However, even with higher prices, the brand could still have an advantage as consumers prioritise spending on comfort and quality, said Jessica Ramirez, co-founder of the retail consultancy The Consumer Collective.
A weekly survey by industry association Footwear Distributors and Retailers of America found shoe sales since Trump’s inauguration were down 9.5% from the same period last year.
Birkenstock, however, said it has not seen any noticeable change in demand. It produces 95% of its shoes at its own factories in Germany and said its vertical integration makes it less exposed to tariffs than peers.
The company said it was pushing ahead with expansion in the U.S. – a crucial market – despite the current turmoil, with plans to open up to five more of its own new stores there by the end of September, for a total of 15.
“We’re not going to alter our highly targeted retail expansion plans due to short-term disruptions,” a spokesperson said.
Whether that strategy pays off will likely come down to consumers like Clay White.
The software engineer from North Carolina bought his first Birkenstocks in 2011 and is now on his third pair, but a severe price spike would make him think twice about buying another.
“If they’re going to be … say over $200, then I would probably try and find a used pair,” White told Reuters. “Or maybe I would purchase them in Europe.”
Birkenstock’s bestselling Arizona leather sandals retail for between $130 and $350.
German brewers are in a similar dilemma. The U.S. is the third-biggest market for German beer outside the EU.
But production costs have risen sharply in recent years, the Association of Exporting Breweries’ Wegner said, and U.S. beer drinkers would inevitably have to shoulder the tariff burden.
The U.S. is also the biggest export market for German wines, with the sector earning around 63 million euros there, about a sixth of total export sales, data from the German Wine Association showed.
For Dr. Loosen, a winery in the Mosel region known for Riesling, which exports a third of its production to the U.S., the financial implications of Trump’s tariffs appear unavoidable.
“It will be a bitter pill to swallow,” said Thomas Loosen, the company’s co-manager.
($1 = 0.9106 euros)
(Reporting by Maria Martinez; Additional reporting by Helen Reid, Rene Wagner, Frank Simon and Timm Reichert; Editing by Josephine Mason and Joe Bavier)
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