On 7 May, EPIC hosted an online meeting with 78 participants to discuss the impact of U.S. tariffs on the European photonics industry. The meeting was highly appreciated, with post-event survey results showing that the vast majority of attendees found it both interesting and valuable. As a result, a follow-up in-person meeting is scheduled for 25 June 2025 at 11:30 during Laser World of Photonics in Munich, along with a follow-up online meeting on 15 July 2025 at 16:00.
While the meeting was not recorded to encourage open and candid dialogue, the summary below highlights some of the issues discussed. To kick off the lively exchange, three highly complementary speakers, each somehow representing a different continent, set the stage for an open discussion on the challenges, actions, and consequences raised during the Q&A on tariffs and their ripple effects across the global photonics supply chain. Thomas Renner, speaking from the headquarters of TOPTICA Photonics in Germany, was followed by Bruno Gross, based in Europe and representing Thorlabs, a company headquartered in the USA. Lastly, Dan Denison offered a U.S. perspective; he is based in the USA and works for OptoSigma, which belongs to the parent company SigmaKoki headquartered in Japan.
“A moderate tariff presents a manageable challenge, but a steep increase would significantly strain U.S. customers and disrupt fair competition, creating a lose-lose situation. Compounding this are tightening export controls, rare earth supply risks, and declining U.S public investment in science, all of which threaten long-term innovation.” Thomas Renner, President & CSO, TOPTICA Photonics
“As a U.S. company with global operations, we’re closely monitoring the situation, though as everybody else we have no insider knowledge or predictions of what is going to be decided next. We’ve begun implementing measures to reduce the impact of tariffs, but much of this effort is still ongoing.” Dr. Bruno Gross, Vice President Europe, Thorlabs
Topics discussed during the meeting
- Tariff Impact on Manufacturing and Supply Chain: Tariffs have heavily disrupted manufacturing supply chains, particularly for custom and OEM production. Companies are now exploring value-added processing and shifts in manufacturing to reduce costs.
- Challenges in Relocating Manufacturing: Due to high investments and the complexity of manufacturing setups, especially for smaller European firms, relocating production is often impractical. However, continued protective trade measures from Europe or the US may push companies to consider alternatives in the Asia-Pacific region, such as India, Korea, China, and Japan.
- Logistics and Shipping Optimization: Strategies may include fulfilling more orders from Europe to avoid tariffs when shipping to Asia, and potentially increasing European manufacturing which is the opposite of the original intention of US tariffs increase. Products sourced from multiple regions (US, Europe, China) may be shipped in separate parcels to reduce cross-border complications.
- Short- vs. Long-term Mitigation Measures: In the short term, companies are optimizing logistics, raising prices globally, and adding targeted surcharges. Long-term responses may or may not involve relocating manufacturing and localizing supply chains to limit exposure to tariffs.
- Bilateral Market Dilemma: USA vs. China: Choosing between the US and Chinese markets has become increasingly difficult due to tariffs and regulatory blacklists. Companies must adapt their products and strategies to serve both regions while managing significant risks.
- Pricing Effects: With many suppliers based in Europe, price increases are likely and could lead to reduced laser sales if customers cannot absorb the higher costs. Some companies have already introduced surcharges—for example, a Chinese platform now adds significant fees to US-made products, which may dampen demand. Future U.S. surcharges on certain Chinese goods are also possible.
- Rare Earth Materials: Most rare earth elements used in optics are mined and refined in China, with purification processes as intricate as crystal growth. Strengthening the supply chain and simplifying export control regulations are essential for maintaining global competitiveness.
- Decline in U.S. Scientific Funding: Cuts to U.S. research funding, especially in biomedical and virus-related fields, pose a threat to innovation and international collaboration. These reductions are limiting scientific freedom and weakening the photonics innovation ecosystem.
- U.S. Business Climate and Policy Uncertainty: The U.S. business environment remains difficult, with slow market recovery and shifting policies undermining funding stability and investor confidence.
- Economic and R&D Challenges: Ongoing economic pressures, combined with tariff impacts and budget cuts, risk a long-term decline in research investment and may contribute to a shortage of skilled researchers in the U.S.
