The German engineering sector is bracing for a potentially devastating blow as the United States government prepares to expand tariffs on approximately 200 product categories within the machinery and plant engineering industries. Bertram Kawlath, President of the German Engineering Federation (VDMA), warned that the impending changes threaten the practical elimination of a crucial export market for numerous German firms, describing the situation as “dramatic” and the tariff impact as “prohibitive” with the potential to force some firms into insolvency.
The expansion targets products under the so-called “Section 232” tariffs, a controversial mechanism initially implemented to protect American steel and aluminum. Beyond the existing 15% baseline tariff already in place under the EU-US trade agreement, the looming changes mandate an additional 50% tariff specifically on the steel and aluminum content of exported goods.
VDMA calculations reveal that if all proposed tariff additions are confirmed, over half (56%) of Germany’s US business will be subject to the augmented duties – a significant increase from the 40% affected following the initial expansion in August. The United States remains the single most important export partner for the German machinery sector, accounting for 13.5% of all exports in 2024.
The impact is already visible in trade figures. The VDMA reports a 7% decline in foreign trade with US clients during the first half of the year, followed by further contractions of 13% in July and an alarming 18.5% drop in August compared to the respective months of the previous year.
Kawlath has strongly condemned the current state of affairs, characterizing the EU-US trade agreement as “valueless” and urgently calls for renewed negotiations between the German government, the EU Commission and the US administration. He emphasizes the need for the EU to actively challenge the tariffs, voicing concern, particularly regarding the perceived lack of commitment from EU Commission President Ursula von der Leyen to comprehensively reassess the trade agreement. The escalating trade tensions risk not only crippling critical German industries but also undermining broader transatlantic economic relations.