EU customs deal with the US causes discontent in industry

Berlin/Frankfurt. Donald Trump's worst threats appear to have been averted, but many industrial companies view the tariff compromise between the EU and the US as too much of a burden for Europe. They want a tough approach from the EU Commission in further talks with the Trump administration, according to a survey conducted by the German Chamber of Industry and Commerce (DIHK) of around 3,500 companies, predominantly from the industrial sector.

The German Mechanical Engineering Association (VDMA) called for renegotiations in a letter to EU Commission President Ursula von der Leyen. Due to the tariffs, many companies' US business is facing closure. Manfred Weber, chairman of the conservative European People's Party (EPP), advocated for more trade beyond the US.

The VDMA (German Engineering Federation) criticizes the fact that the mechanical engineering industry is increasingly suffering from import tariffs in the US. Although the deal with the US provides for a 15 percent tariff for most EU products, the Trump administration is imposing the far higher steel and aluminum tariffs of 50 percent on an increasing number of products. The VDMA estimates that 30 percent of US machinery imports from the EU are already subject to a 50 percent tariff on the metal content of the product. This includes engines, pumps, industrial robots, and agricultural and construction machinery.

The tariff deal has already lost its value for the mechanical and plant engineering industry, said VDMA foreign trade expert Oliver Richtberg. "The flat-rate 15 percent rule is effectively undermined by the tariffs on steel and aluminum products."

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The anger is not only widespread in the mechanical engineering sector. A survey by the German Chamber of Industry and Commerce (DIHK) revealed that 55 percent consider the agreement to be too much of a burden on the European economy. Among companies with US business, 54 percent reported less trade there as a consequence. "The US's new, isolationist trade policy is likely to backfire significantly," Volker Treier, head of foreign trade at the DIHK, told the German Press Agency.

Trump and von der Leyen announced a compromise in the tariff dispute at the end of July. Among other things, a US tariff of 15 percent would apply to most European products. Tariffs on US industrial goods, however, would be abolished entirely.

The EU wants to go a long way toward accommodating the US so that it can reduce tariffs from 27.5 percent on car imports from the EU to 15 percent, retroactively as of August 1. Trump, on the other hand, recently made new demands: He wants the EU to stop applying its strict digital laws against American companies.

In the DIHK survey, 17 percent of companies with US business stated that they would postpone investments there. Nine percent cited fewer investments in the US. "US customers will primarily pay the levied import duties themselves," Treier said. According to the study, 31 percent of companies with US business intend to change how they handle US customs costs. Of these, 62 percent plan to pass them on to their customers.

The DIHK emphasized that the planned reduction in US tariffs in the auto and metal sectors must be implemented quickly. A mechanism is also needed to rule out future US tariff increases. "In an emergency, the EU should not shy away from countermeasures and should negotiate robustly in this area," Treier said.

EPP Chairman Weber advocated a stronger focus on other markets. "The best response to Donald Trump's protectionism now is to do business with global partners who want to continue practicing free trade with us," the CSU politician said in Berlin. The EU's trade agreement with the South American Mercosur states should be concluded quickly.

Weber called the compromise with the US a "painful deal," but one that prevented a trade war. He also called for greater leverage on the EU's internal market. He noted that nationally isolated markets still exist in services and energy, for example.

RND/dpa