Trump's tariffs could be tough to crack for a German nutcracker maker focused on the US

MARIENBERG, Germany (AP) — U.S. President Donald Trump's tariffs threaten to become a tough nut to crack in an unlikely place — a small company whose factory nestled deep in the hills of eastern Germany produces painstakingly hand-crafted nutcrackers that are snapped up by American collectors.

Alongside classic fare such as a variety of Santas, Scrooge and the Mad Hatter, specifically American-themed and event-related collectibles are a staple at Steinbach Volkskunst. There's Uncle Sam, the Statue of Liberty, Mickey Mouse and a coronation-themed tribute to Britain's King Charles III among many others.

This week, a limited-edition creation titled “Resolute Desk of the President,” featuring a seated Trump-like figure signing a “presidential proclamation,” is taking shape at Steinbach's factory on the edge of the small town of Marienberg, near the Czech border.

A nutcracker typically takes around a week to produce as its wooden parts are turned, painted, dried, assembled and in many cases dressed in a costume. In this case, the president's blond mane is combed and given a shot of hairspray as a finishing touch. The price tag is over $300, fairly typical for the more elaborate of the company's smaller-scale nutcrackers.

An uncertain outlook

For a firm that exports more than 95% of its products and sells more than 90% of what it makes in the United States, Trump's tariffs are a significant potential headache. The U.S. initially imposed a 20% tariff on goods from the European Union — in which Germany, better known for industries such as auto manufacturing — has the biggest economy. But the administration suspended that for 90 days while leaving a baseline 10% tariff in place.

Ahead of the announcement, “we were able to think through various scenarios and think about what would happen or not, but I think that ultimately everyone was somehow caught cold,” owner and manager Rico Paul says. “But it's the same for everyone ... so we all have to cope with it.”

Steinbach, with about 35 manufacturing employees and five in office functions, produces 30,000-40,000 items a year and, according to Paul, could sell many more than that. He says the company is lucky to have many longstanding wholesale customers who placed their orders in January for nutcrackers to be delivered throughout the year until Christmas, lessening the immediate concerns.

“There are no direct effects for us yet,” Paul says. “No customer has canceled his order, but we will see next year whether the prices have perhaps become too expensive and there is less demand.”

The manager says Steinbach is considering whether to set up a logistics facility in the U.S. and employ people there to ship in goods and offer corporate customers its products from inside the country, so that they don't have to deal with the tariffs.

‘Made in Germany’ stays

There are limits to what the company can change. Craft from the Erzgebirge, or Ore Mountains, around Marienberg is an institution in itself and last month was added to a list vetted by a German sub-committee of the United Nations cultural organization UNESCO, as an “example of good practice of the conservation of immaterial cultural heritage.”

“This is a ‘made in Germany’ product and that is also important to the collector,” Paul says. “That means we will never relocate production.”

The focus on the U.S. market also is deeply embedded in the company's history and goes back nearly 80 years. The Steinbach family had to give up its factory in what became communist East Germany after World War II and started over near Hanover, in the west. The nutcrackers became a popular souvenir for American troops stationed in Germany, and family head Christian Steinbach made a concerted effort to build up the U.S. market.

The company moved back to the Erzgebirge after Germany was reunited in 1990. It fell on hard times after Christian Steinbach died in 2008 and the financial crisis hit. Paul took over and revived the firm after it filed for bankruptcy a decade ago, and he's counting on America even now.

“We're very positive because we have built up these customer relationships over decades, deliver reliably and have more demand than we can produce every year,” he says, adding that the company will “keep faith with America.”

An ‘essential infrastructure asset’

During last year's election campaign, Steinbach produced limited-edition nutcrackers representing Trump and opponent Kamala Harris. The Republican sold out; the Democrat didn't entirely.

The company has added a tongue-in-cheek plea for tariff clemency to the president's desk in its latest creation.

The proclamation being signed by “Mr. President” is headed “Recognition of Steinbach Nutcrackers as Essential Cultural Heritage”

“I hereby declare the nutcrackers of Steinbach Volkskunst to be an essential infrastructure asset of the United States,” it says. “Effective immediately, all Steinbach nutcrackers shall be exempt from all tariffs and taxes — for life.”

___

David Keyton contributed to this report.