The German engineering sector is voicing serious concerns over the potential impact of proposed US tariffs, warning that a 30% import tax on exports to the United States could threaten the viability of numerous companies. Bertram Kawlath, President of the German Engineering Federation (VDMA), told Politico that while some businesses might weather a 10% tariff, a 30% levy presents a significantly more challenging scenario.
The potential tariffs, announced by US President Donald Trump, are raising anxieties within the German manufacturing base. Kawlath argues that the measures could paradoxically undermine US industrial ambitions. He highlighted that many products manufactured by VDMA member companies are not currently produced within the US, making imports essential for bolstering American industry – a goal Trump has publicly stated. Increased tariffs, therefore, present an obstacle to the desired “reindustrialization” of the United States.
In response to the evolving US trade policy, Kawlath is advocating for a renewed focus on strengthening European markets. He stresses the importance of deepening the European single market, citing limitations on scalability for businesses in Germany, particularly disruptive start-ups, due to the absence of a fully integrated capital market union. He emphasizes the need for capital to flow freely across Europe, irrespective of the country of origin, to support innovation and growth.
Kawlath also acknowledged a palpable sense of frustration within the engineering sector, which he attributes to a combination of regulatory burdens and practical limitations. However, he expressed optimism, noting that both the EU and the new German government appear to be recognizing the need for adjustments in this area.
