Germany’s powerful engineering federation, the VDMA, is urgently calling on the European Union to renegotiate its tariff agreement with the United States. The demand comes in response to new US duties targeting the steel and aluminum content within exported machinery, a move that threatens to destabilize the critical manufacturing sector.
Impending Expansion and Industry Instability
The VDMA warns that the situation could dramatically worsen if the American tariff lists are expanded in December as planned. Should this occur, the federation estimates that more than half of all machinery exported from Germany would be subject to the high steel and aluminum tariffs. VDMA President Kawlath emphasized the need for immediate renegotiation, stating that the current deal provides “anything but predictability and stability” for the industry.
The High Cost of ‘Section 232’ Tariffs
According to the VDMA, 200 additional machinery products are slated to be added to the “Section 232” list of sectoral tariffs in December. This action would impose a steep 50% tariff on their steel and aluminum content. Compounding the issue are severe penalties for administrative errors; companies facing misreporting allegations could, in a worst-case scenario, be hit with a 200% penalty. The VDMA also criticized the complex and burdensome documentation requirements these rules impose on businesses.
EU’s Position and the Failed Bid for Security
The EU Commission has stated that it remains “in contact” with the US government regarding the steel tariffs. To avoid even higher tariffs in the past, the EU accepted a general tariff rate of 15% on most products, which took effect on August 7. That agreement was originally intended to provide European companies with “planning security,” a goal that German industry leaders now argue has failed.
Broader Context of US Trade Negotiations
The escalating trade friction with the EU, a key economic ally, is surfacing at the same time the US is navigating other complex trade disputes. In related developments, an agreement has reportedly been reached in the US-China dispute over the export of rare earths. Following a meeting with President Xi, US President Trump stated that obstacles had been “cleared” and that the two sides had secured a one-year agreement.