European union safeguards German mechanical manufacturing sector against order declines
In the second quarter of 20XX, the German machinery industry faced a challenging period, with a significant decline in new orders, according to data provided by the VDMA, an industry association based in Frankfurt.
The industry experienced a 9 percent drop in orders from non-Eurozone countries compared to the same period the previous year. This decline is primarily attributed to the ongoing trade conflict with the USA, as stated by VDMA chief economist Johannes Gernandt.
The conflict stems from the US tariffs imposed in mid-2025, which apply tariffs of 10 percent to 50 percent on various EU products, including industrial machinery. These tariffs, part of a "reciprocal" tariff policy implemented by the US government, have increased trade tensions and costs for German exporters to the US.
The trade dispute has had a notable impact on the industry. Orders from outside the Eurozone decreased by 13 percent in June compared to the previous year, and the industry received significantly fewer new orders in real terms, down by 2 percent in the second quarter.
However, the growth in orders from the Eurozone in the same period was 19 percent compared to the previous year. Despite this growth, it was not sufficient to offset the losses from domestic and non-Eurozone orders.
The overall picture for the German machinery industry in the second quarter of 2023 is one of decline. The industry reported a 5 percent decrease in orders compared to the previous year, and a slight decrease in real order values.
Despite these challenges, there is a glimmer of hope. According to Gernandt, the declines in orders could be a positive sign that Europe is strengthening its own location. He also notes that the planned trade deal with the USA provides expensively bought planning security for companies.
The impact of the now planned 15 percent tariff on imports into the USA cannot yet be assessed. However, the growth in the first half of 2023 is attributed to increasing demand from European countries, which could indicate a positive trend moving forward.
In conclusion, the US tariff regime implemented in 2025 placed substantial pressure on the German machinery industry during that period, leading to output declines and trade difficulties prior to potential relief from the EU-US tariff agreement finalized in mid-2025.
- To mitigate the impact of the challenging circumstances, the German machinery industry could consider implementing a community policy that promotes vocational training to strengthen domestic production capabilities and reduce dependence on exports to non-Eurozone countries.
- As part of their long-term strategies, some businesses within the industry may choose to focus on finance and diversify their portfolio by investing in manufacturing sectors less affected by global trade tensions, thus reducing their reliance on the US market.
