VDMA sees negative consequences for German mechanical and plant engineering following US tariff deal

The EU Commission defends the 15 percent “tariff deal” with the US as a “decision for stability and predictability,” writes the German Mechanical Engineering Industry Association (VDMA) in a statement released today. However, more and more products are being excluded because they fall under the much higher steel and aluminum tariffs. This threatens the existence of many companies, it continues.

The VDMA is urging the EU Commission to push for improvements and has addressed an open letter to Commission President Ursula von der Leyen. The association refers to a guest article by the Commission President for the “Frankfurter Allgemeine Zeitung”: “The most important element of our agreement is that we have drawn a very clear line at 15 percent for most EU products, including vehicles and medicines.” However, von der Leyen fails to mention two key points that cast the “tariff deal” in a different light, explains the VDMA. Firstly, the US has significantly expanded the list of products to which the much higher steel and aluminum tariffs are to apply. As a result, around 30% of US machinery imports from the EU are now subject to a 50% tariff on the metal content of the product. For many companies in the manufacturing sector, such as mechanical and plant engineering, this means that their entire US business is at risk. Many aluminum packaging products are now also subject to 50% tariffs.

On the other hand, the list of steel and aluminum tariffs is to be reviewed every four months and expanded if necessary. Instead of planning security, as announced by the EU Commission, uncertainty will continue to prevail in transatlantic trade because the agreement is not permanent.

Since the tariffs were first announced, the VDMA had expressed cautious optimism that a permanent 15% tariff could at least provide planning security for companies. However, following the agreement that has now been reached, VDMA President Bertram Kawlath concluded that the new tariffs are once again unsettling European industry. “The damage caused by this and the prospect of further tariffs in the coming months are pushing important branches of the mechanical engineering industry to the brink of an existential crisis,” he warns.