Europe Inc take evasive action as Trump tariffs hit, braces for second wave

By Adam Jourdan, John Revill, Victoria Waldersee and Giselda Vagnoni

LONDON (Reuters) -European companies, from Swiss chocolatiers to German car parts makers, are preparing their "plan Bs" to adapt to U.S. trade tariffs that became a blunt reality on Tuesday, with a second barrage specifically targeting the region expected next month.

U.S. President Donald Trump imposed 25% tariffs on imports from Mexico and Canada, along with a doubling of duties on Chinese goods to 20%, moves which could upend nearly $2.2 trillion in two-way annual U.S. trade.

Many European companies, while not directly affected yet, are being forced to scramble because of their exposure to North America while a second barrage of tariffs in April looms, with Trump threatening a 25% "reciprocal" rate on European goods.

Swiss chocolate maker Lindt & Spruengli is set to ship to Canada directly from Europe rather than its factories in the United States to avoid the impact of Trump's tariffs and any countermeasures.

"The volumes that we source currently for Canada can all be shifted to Europe," CEO Adalbert Lechner told reporters.

"So far, we have a Plan B to avoid these tariffs in Canada."

German tire and auto parts maker Continental AG, which has plants in Mexico, said it was "monitoring" the situation and would "optimize" its supply chain to get best value for its clients.

"We are in talks with all of our customers. We cannot yet say whether this tariffs issue could lead to production lines being relocated," Continental chief financial officer Olaf Schick told Reuters.

The firm has seven plants in Mexico, one of which is being closed. Schick said 90% of its truck tires and half of car tires sold in the United States were made there domestically, with the rest imported mainly from Europe, but also from South America and Mexico.

"Our position is that we cannot absorb additional tariffs. As far as our suppliers are concerned: we generally source locally," Schick said.

NEXT WAVE TO HIT EUROPE

While tariffs have dominated corporate America's discussions for some time, European companies are now not becoming increasingly concerned about potential tariffs impacting cars and other exports in early April.

Cristiano Fini, president of Italian farmers lobby CIA, said possible tariffs on Europe could cause "billions of dollars of damage" to the Italian food sector, hitting producers of items from Parma ham to Prosecco sparkling wine.

"Those exports to the United States are worth more than 2.4 billion (euros), a wealth for Europe as well," he said.

Irish bank Permanent TSB is assuming that the European Union will be hit with slightly lower 10%-15% tariffs on exports to the United States when calculating the capital it needs to cover potential loan defaults, its finance chief said.

European leaders have looked to show unity and resolve in the face of the threat of U.S. tariffs, which analysts fear could dent the region's economic growth prospects.

"Germany supports the EU Commission's approach of working with the U.S. government to find a negotiated solution," Germany's economy minister Robert Habeck said in a statement.

"But the EU will not be pushed around. If President Trump imposes the announced tariffs on EU products, we will react with unity and self confidence."

Some, though, see a silver lining.

Swiss logistic group Kuehne und Nagel told Reuters in a statement that "complicated" global trade could play to its strengths.

"We expect logistics and customs clearance costs to increase in the short and medium term, especially at U.S. borders. We are ideally equipped for this."

(Reporting by Adam Jourdan; Additional reporting by Christop Steitz, Victoria Waldersee, Andrey Sychev, John Revill and Giselda Vagnoni; Editing by Bernadette Baum and Tomasz Janowski)