Spending time at IWA Outdoor Classics in Nuremberg, Germany, last week clarified, to a large extent, the issues that the European industry is facing.
One of the most telling is tariffs on products being exported to the United States.
What was an easy calculation before the 2024 U.S. presidential election has become a hodgepodge of calculations and recalculations with no clear answer to the question.
Even just a blanket 15% tariff sounds clear-cut and one that most companies can deal with, but in the short case study below, you can see that even a blanket percentage is not very clear.
Hults Bruk has been forging steel in the same remote town, north of the Swedish city of Norrköping.
The location was selected in the late 1600s for its advantageous position at the end of a valley and on the edge of a forest, next to an active stream that originates from Lake Ågelsjön.
In 1697, Hults Bruk began producing forged products, such as nails, iron bars, and, eventually, hand tools, axes, and spades.
Since those days, Hults Bruk has continually made quality axes and other forged products, sold worldwide, including in the United States.
But the sales of the U.S. product could go away to a large extent if Washington, D.C. continues to waffle on a definitive and fair tariff number.
Here are some of the dilemmas that Hults Bruk is experiencing:
Planning for a tariff number is crucial for any company exporting to the United States. If it's 5%, 15%, or 20%, the number is the number, and the exporter can plug it into their spreadsheets and then decide whether business in the United States is feasible.
But the constant moving of the goal posts makes planning impossible and puts the exporter in a tough spot.
But even if you get a number, how is that specific number applied?
In the case of Hults Bruk, it would seem relatively simple: you have a forged head, a handle, and a leather sheath.
The head is forged from Swedish steel in Sweden; the handle comes from timber imported from Tennessee and is carved in Sweden; and the leather is also from Sweden.
So, a simple 15% calculation would be reasonable, but iron or steel is taxed at a higher rate of 50%, which could mean the axe is not tariffed at 15% but 50% on the value of the goods.
A 50% tariff would add another $100 to the price of the axe or other forged product, making it no longer feasible to export to a market that is 20% of the company’s business.
But what if the tariff is on the raw bar of steel? A 50% tariff on an unfinished bar would be a minimal upcharge, one that Hults Bruk could live with.
Also, since the handles are all made from U.S. timber, should Hults Bruk receive some credit or exemption from the 15% tariff?
These are the type of questions suppliers are asking, but with little guidance from Washington, they are working in the dark.
When the Supreme Court ruled against the initial tariffs in February, President Trump first implemented a 10% across-the-board tariff regime and then, under Section 122 of the Trade Act of 1974, increased it to 15% for up to 150 days.
Treasury Secretary Scott Bessent has since indicated that the tariff would likely revert to its prior rate in five months.
For a company like Hults Bruk, which has been making axes for over 300 years, they are just asking for clarity and stability in tariff pricing so they can get back to the important work of making the best-quality product possible.
– Alex Miceli
