VDMA urges EU to renegotiate new US tariffs deal

Brussels – The German mechanical engineering association VDMA has called on the EU to “renegotiate” its tariffs deal with the US following the expansion of US duties on the imports of steel and aluminium products.

In August, the US expanded its steel and aluminium tariffs on the EU under its ‘section 232’ national security tariffs.

The expansion added more than 400 new product categories, including machinery, and applies a 50% tariff to the steel and aluminium content of affected machines, in addition to a 15% reciprocal tariff on the value of the remainder.

In a 16 Oct meeting with Trade Commissioner Maros Sefcovic, VDMA president Bertram Kawlath said machinery products must be excluded from these tariffs, as they pose a direct threat to the industrial SME sector.

According to Kawlath, 40% of European machinery exports to the US are subject to the expanded tariffs on steel and aluminium products introduced by the US government in August.

The “immense” new tariff burden on European machinery manufacturers, said Kawlath, contradicts the purpose of the tariff deal agreed between the EU and the US in July.

“The EU must not accept the extensive market isolation by the US without protest and must strongly advocate for the removal of tariffs on machinery products,” he added.

The removal of the duties, Kawlath went on to say, is also in the interest of US industry, which relies on European production technology to build and maintain its industrial base.

Commenting on development, Martin Drasch, CEO of German forming technology and press manufacturer Andritz Schuler, said the flat tariff of 15% negotiated between the US and the EU applies to very few of the group’s products.

“Our systems are primarily made of steel, which is still subject to 50%. Adding to the burden, we must now calculate and prove the exact raw steel content of all individual components,” said Drasch.

The group is now required to specify where the steel was melted and cast; otherwise the goods cannot be cleared and delivered, the CEO explained.

“The enormous bureaucratic effort and the additional costs on top of the tariffs are significant and painful competitive disadvantages,” he added.

Drasch went on to add that further uncertainty arises from the fact that the tariff deal between the EU and the US is only valid for four months, after which the Section 232 tariffs will be reviewed again.

“Thus, the deal has not delivered what the market urgently needs: clarity, reliability, and predictability,” he said.

The “detrimental” tariffs, said the Andritz Schuler CEO, could lead to extended delivery times and increased costs for US customers, who he said “urgently need [the products] for the intended re-industrialisation.”

Also commenting, Bernard Krone, chairman of the supervisory board, Krone Group, said the classification of many agricultural machines as so-called steel products and the associated US tariffs “hit us completely unexpectedly.”

The agricultural machinery maker said the US was its “most important foreign market” and that, with the tariffs, its products are becoming “significantly more expensive” in the market.

“This undermines our competitiveness precisely where we have been active for decades,” said Krone.

Stefan Engleder, CEO of injection-moulding machinery maker Engel Group, also noted that 25% of the group’s total revenue comes from the US market.

However, he said, the ongoing uncertainty regarding punitive tariffs on steel and aluminium is hindering investment decisions.

“Foreign injection-moulding machine manufacturers are indispensable, as there are no significant domestic producers — a contradiction to current US tariff policy,” he added.

Similarly, Dr Armin Schmiedeberg of Arburg said 90% of the machines used for plastics processing in the US come from overseas.

“Defining an entire injection-moulding machine as a ‘steel derivative’ is a gross misjudgment,” said Schmiedeberg.

With the new 50% tariff, he said, the ‘steel value of the machine’ is added to the 15% tariff imposed on machinery products.

“Importing finished nails instead of steel rods may be considered a steel derivative — but not complex technical products like injection-moulding machines,” he said.