Why the New 15% Tariff on Eurozone Equipment Demands an Immediate Valuation Review

On 1 August 2025, a 15% tariff on Eurozone Equipment came into force for industrial machinery and equipment imported into the United States. While tariffs are not unusual, this one is likely to have a swift and measurable impact on insured property values, particularly for organisations whose operations depend on high-value, highly-specialised European equipment.

The challenge is straightforward: replacement costs have increased overnight, but insured values have not. For facility owners, insurers, and brokers, that gap represents an immediate risk of under-insurance.

European Equipment: A Critical Supply Source

The Eurozone remains a leading supplier of precision-engineered equipment to U.S. industries, including:

• Packaging machinery from Germany, Italy and Spain – essential to food, beverage, consumer goods, and industrial sectors.
• Diagnostic imaging and medical systems from manufacturers such as Siemens (Germany) and Philips (Netherlands).
• Pharmaceutical production equipment, from tablet presses to sterile filling lines, largely sourced from Italy, Germany, and Austria.

These assets are rarely off-the-shelf. They are customised, often with lengthy lead times, specialist installation, and regulatory approvals. All of these factors are now subject to higher costs under the new tariff regime.

Rising Replacement Costs and the Insurance Gap

Most insurance cover for fixed assets is based on Replacement Cost New (RCN); the cost to replace an asset with a new one of similar specification under current market conditions.

With the 15% tariff now in effect, RCN for Eurozone-origin equipment has increased accordingly. Unless insured values are reviewed and updated, organisations could find themselves under-insured by a similar margin.

For Example: A pharmaceutical facility with $10 million of Eurozone-sourced production equipment will now face replacement costs of $11.5 million. Without updated values, the $1.5 million difference would need to be covered from business resources in the event of a loss.

Sectors Most at Risk

While the tariff applies broadly, some industries are more exposed due to the nature of their equipment supply chains:

• Healthcare providers and diagnostic laboratories reliant on Eurozone imaging and laboratory automation.
• Pharmaceutical manufacturers operating validated and regulated equipment with few domestic alternatives.
• Food, beverage and consumer goods producers dependent on high-throughput packaging lines from European suppliers.
• Specialist manufacturing sectors where replacement options are geographically limited.

For these businesses, the valuation risk is both material and immediate.

Implications for Asset Valuation

From an asset valuation perspective, the tariff introduces several considerations:

1. Updated RCN Calculations – Insurance appraisals must now reflect tariff-inclusive costs to ensure coverage matches replacement reality.
2. Inflationary Effects and Supply Delays – Tariffs can lengthen lead times and create additional claims inflation, impacting reinstatement periods and overall recovery costs.
3. Knock-on Impact on Premiums – As replacement values rise, insurance premiums are likely to follow.
4. Importance of Specialist Valuation – Accurate, market-aligned asset valuations will require input from professionals familiar with tariff impacts, regulatory constraints, and current supply dynamics.

Recommended Actions

Organisations should act now to:

• Review asset registers and insured values, focusing on high-value imported machinery.
• Identify equipment sourced from Eurozone suppliers and assess replacement costs under the new tariff regime.
• Commission a professional valuation review to update insured values in line with current market conditions.
• Engage with insurers and brokers early to ensure adequate cover and avoid gaps in protection.

The Bottom Line

The August tariff represents more than a shift in trade policy, it is a direct, quantifiable change to the cost base for many insured assets. Without timely reassessment, businesses face heightened exposure in the event of a claim.

In periods of market and policy volatility, proactive asset valuation is not optional. It is a key part of safeguarding operational resilience and ensuring that insurance cover is both current and sufficient.

About Hickman Shearer

At Hickman Shearer, we specialise in providing accurate, market-aligned asset valuations that reflect the realities of today’s trading environment, including the impact of tariffs, supply chain pressures, and inflation. Our team works closely with asset owners, insurers, and brokers to ensure insured values are up-to-date, so you’re fully protected when it matters most.

If your organisation relies on Eurozone-sourced equipment and you’re concerned about how the new 15% tariff could affect your replacement costs, get in touch with us today. We can help you review, reassess, and update your asset valuations to safeguard your business against under-insurance. Contact Us.