German industry fears that US tariffs could worsen a long-running downturn
German industry fears that US tariffs could worsen a long-running downturn AFP

Germany's factory and equipment makers' federation warned Wednesday the sector is facing an "existential crisis" after the United States broadened the reach of its metals tariffs.

In a letter to European Commission President Ursula von der Leyen, the VDMA trade group said the expanded levies "have now sent a fresh chill of uncertainty rippling through European industry".

"The harm caused by them, along with the prospect of still more in the months to come, are sending key machinery sectors hurtling toward the precipice of an existential crisis," wrote the group's president Bertram Kawlath.

The European Union and US President Donald Trump struck a framework deal in late July under which most EU exports to the United States face a 15-percent across-the-board tariff rate.

They released more details last week but negotiations are continuing, and levies in some areas remain unclear.

The VDMA, which represents some 3,600 companies in Europe's biggest economy, said the US move to expand steel and aluminium tariffs took the levies far beyond the 15-percent level for some products.

Trump earlier this year imposed a 50-percent tariff on both metals. Last week the Commerce Department broadened their reach to cover hundreds more products containing steel and aluminium derivatives.

As a result, about 30 percent of American machinery imports from the EU now face a 50-percent tariff on the metal content of the product, according to the VDMA.

The list of affected goods is also set to be expanded every four months, it warned.

In addition to the tariff cost, the extra duties bring "painful new bureaucratic burdens" such as extra paperwork, the group said.

Kawlath urged von der Leyen to step up efforts to lessen the impact of the extra levies, "and to ensure that machinery and equipment are excluded from future sectoral tariffs".

The German Chamber of Commerce and Industry released a survey Wednesday, in which a majority of businesses polled said they believe that the EU-US deal places too great a burden on European economies.

Most companies believed the bloc should take a tough stance towards the Trump administration in further talks -- even if it impacts their own business.

Trump's tariff onslaught is an extra headache for German manufacturers which have already been facing a long downturn.

Almost a quarter of a million jobs have been lost in German industry since 2019, according to a study by consultancy EY published Tuesday.