The United States recently announced a 15% tariff on industrial machinery and equipment imported from the Eurozone, starting August 1, 2025. While the broader political and trade implications are still unfolding, the immediate consequence for the forestry sector – particularly pulp and paper mills and sawmills – is clear: many US facilities are now significantly under-insured.
Why This Matters: Eurozone Machinery Dominates the Forestry Sector
Pulp and paper operations in North America have long relied on German, Italian, and Austrian suppliers for their most critical production equipment. From paper machines and pulp refiners to debarkers, log sorters, and kilns, a significant portion of machinery installed in U.S. mills originates from Eurozone manufacturers such as Voith, Andritz, Bellmer, Toscotec, and EWD.
These machines are not commodities – they are highly engineered, specialized systems with limited domestic alternatives. Replacement costs are already high due to their precision manufacturing and the logistics involved in global supply chains. Now, with a 15% tariff applied at the border, facilities that depend on Eurozone equipment are likely facing sudden and sharp increases in Replacement Cost – in some cases by hundreds of thousands or even millions of dollars.
The Insurance Gap: How Replacement Cost Has Changed Overnight
In the world of insurance appraisals, Replacement Cost New (RCN) is the cornerstone for calculating insurable values. This premise represents the cost to replace assets with new ones of like kind and quality – including all associated costs like freight, installation, duty, and commissioning. With the new tariff in effect, the RCN of affected equipment will jump by 15% overnight, unless the suppliers decide to reduce current profit margins.
Yet unless values are updated promptly, most insureds are still carrying pre-tariff values – meaning they are under-insured.
Consider a sawmill with €10 million worth of Eurozone-sourced equipment (approximately $11 million USD). With the new tariff, the replacement cost is now closer to $12.65 million. That $1.65 million gap – if not captured in the insured value – may become the owner’s liability in the event of a loss.
And it’s not just new purchases that are affected. Even if the equipment was bought years ago, insurance coverage is based on current replacement cost, which now includes the tariff impact.
Risk Management Action: What Forestry Clients Should Do Now
For mill owners and operators, the solution starts with awareness – and continues with immediate action:
- Review your insured values: Focus on machinery categories that are primarily sourced from Europe.
- Schedule updated insurance appraisals: If your last appraisal is more than 12–18 months old, it likely does not reflect the tariff impact – or other cost escalations in materials and labor.
- Engage specialists familiar with the forestry sector equipment: A generic appraisal may overlook the origin of machinery or the true cost of like-for-like replacement.
Conclusion: A New Cost Reality Demands New Insurance Thinking
Tariffs may be temporary or politically motivated, but the risk of under-insurance is very real – especially in sectors like forestry where equipment is both costly and globally sourced. At a time when catastrophic losses from fires, floods, and mechanical failure continue to rise, now is not the time to be caught with outdated insurance values.
For facility owners, brokers, and insurers, the message is simple: 15% tariffs represent up to 15% higher costs – and potentially 15% uncovered losses. The time to update values is now.
Why Work with Suncorp Valuations
At Suncorp Valuations, we bring deep, specialized knowledge of the forestry sector – including extensive experience appraising pulp and paper mills, sawmills, and related processing operations across North America and globally. Our appraisal professionals understand the international sourcing of machinery, the replacement cost dynamics of complex industrial assets, and the insurable value implications of trade policy changes like the current U.S. tariffs. With a long-standing reputation for quality, accuracy, and industry insight, Suncorp is uniquely positioned to help clients protect their assets and avoid under-insurance in a rapidly changing cost environment.