German Industry Demands Renegotiation of US Trade Deal
German industry representatives are demanding urgent renegotiation of the European Union's trade agreement with the United States, warning that additional tariffs on steel and aluminum imports are disproportionately affecting the machinery sector. The Association of German Mechanical and Plant Engineering (VDMA) has raised alarm bells about what it calls 'foul play' in transatlantic trade relations.
Tariff Structure Creates Heavy Burden
Under the agreement struck between the Trump administration and the European Commission in July 2025, manufacturers from the EU bloc face a complex tariff structure that includes a 15 percent baseline tariff plus an additional approximately 40 percent levy on the steel and aluminum components of machinery exported to the US. 'It is to be feared that the US will continue this foul play,' said VDMA President Bertram Kawlath, calling on the EU to continue negotiations.
The exact fees are determined through a complicated calculation system that is set to be applied to further products in the sector following another round of trade talks scheduled for December 2025. According to VDMA calculations, this would mean that around 56 percent of German machinery exports would be affected by the steel and aluminum tariffs, impacting virtually all branches of the mechanical engineering industry.
Widespread Impact Across German Industry
The German machinery sector, which accounts for roughly 3 percent of Germany's GDP and holds a 27 percent share of the global market, employs about one million highly skilled workers. The industry has already been facing significant challenges, with VDMA forecasting a dramatic 5 percent decline in production for 2025, revised down from an earlier 2 percent projection.
Kawlath also warned the US of negative consequences for its own defense production, noting that American arms manufacturing is dependent on machines manufactured in Europe. 'This isn't just about German exports - it's about the interconnected nature of modern manufacturing,' a VDMA spokesperson told reporters.
Historical Context and Current Tensions
The EU-US trade deal, agreed on July 27, 2025 between European Commission President Ursula von der Leyen and US President Donald J. Trump, was intended to restore stability and predictability in the world's most significant bilateral trade relationship. The agreement established a 15 percent tariff ceiling for most EU exports to the US, including key sectors like cars, semiconductors, and pharmaceuticals.
However, the maintenance of existing 50 percent tariffs on steel and aluminum continues to create challenges for European manufacturers. Industry experts describe the agreement as merely a 'temporary truce' that doesn't address core concerns about global metal tariffs.
Economic Consequences and Industry Response
The VDMA, representing 3,600 machinery and plant engineering companies, has been actively supporting members through guidance on managing tariff compliance and providing regular updates on US trade policies. European companies are responding by establishing or strengthening US production facilities to mitigate tariff risks, though this represents significant additional investment.
'We're seeing companies having to make difficult decisions about their global supply chains and manufacturing locations,' explained a trade analyst familiar with the situation. 'The additional costs are substantial and could affect competitiveness in key markets.'
The organization emphasizes the need for stability and predictability in transatlantic trade relations, warning that continued uncertainty could lead to further job losses in an industry that has already seen over 200,000 industrial jobs lost since 2020.