A Snag in German Machinery Orders: The Role of Trade Disputes
Reduced Demand for Shock Absorbers in Mechanical Engineering Sector: Decline in Orders in April - Decrease in Orders for Mechanical Engineering Sector: April's poor performance
The bustling machinery and plant engineering sector in Germany took a hit in April 2025, grappling with a downturn in new orders. Blame it on the escalating trade disputes, which caused a drop in orders after a promising first quarter.
The industry association, VDMA, reported a mere one percent increase in orders for the first four months of the year compared to 2024. However, Johannes Gernandt, the chief economist of the German Engineering Federation (VDMA), explains that global uncertainty remains high and business investment is restrained.
Compared to the same month last year, the sector saw an overall six percent decrease in new orders, adjusted for price increases. Domestic orders were four percent lower, while foreign orders took a sharper plunge of 7 percent. The decline in overseas orders, a specific 13 percent, was particularly notable in business with non-Eurozone countries.
Gernandt attributes this slump to the numerous trade threats and announcements by U.S. President Donald Trump, resulting in a climate of uncertainty. He emphasizes that it's essential for Germany and Europe to set a strong course for themselves, as the government must swiftly follow up on its promises to reinforce Germany's location.
Bracing for the Impact of Trade Disputes
- Wagers on Stability: The ongoing trade conflict with the U.S. has impacted Germany's machinery industry. In April 2025, order intake dropped by six percent overall, with domestic orders down by four percent and foreign orders falling seven percent[2].
- Global Ripples: The U.S.-China trade war may lead to job losses in German industry if no agreement is reached. As Chinese exporters increasingly target European markets, they might edge out German products, resulting in potential job losses in sectors such as machinery engineering[3].
VDMA and the Industry's Frontline
- Advocating for the Sector: The VDMA is a pivotal industry association for Germany's machinery sector. It has been vocal about the impact of trade disputes, championing stability and investment incentives to support the sector[2][5].
- Volatile yet Hopeful: Despite the hurdles, VDMA member companies remain cautiously optimistic about the U.S. market in the coming years. They recognize the importance of maintaining competitiveness amidst global trade tensions[5].
Navigating Governmental Responses
- Incentivizing Investment: The German government has announced a fiscal investment program, offering hope for stimulating investment and fortifying the industry's resilience[2].
- European Union Countermeasures: The European Union has implemented tariffs on U.S. imports, although these are currently suspended until July 2025. This broader EU response sheds light on ongoing efforts to negotiate with the U.S. and buffer European industries from trade tensions[4].
In conclusion, while trade disputes pose significant challenges to Germany's machinery and plant engineering sector, the VDMA is actively advocating for industry support, and the government is exploring fiscal incentives to bolster resilience. Even so, the landscape remains uncertain, requiring both political and economic stability to strengthen the sector.
- Despite the decline in overseas orders, particularly in non-Eurozone countries, the VDMA emphasizes the importance of setting a strong course for Germany and Europe, urging the government to follow up on its promises to reinforce the country's location.
- The German industry association, VDMA, is vocal about the impact of trade disputes on the machinery sector, advocating for stability and investment incentives to support the industry.
- The German government recognizes the need to stimulate investment and fortify the industry's resilience, announcing a fiscal investment program to counteract the effects of the ongoing trade conflicts.
