Published by Global Banking & Finance Review®
Posted on September 16, 2025
2 min readLast updated: January 21, 2026
Add as preferred source on GoogleGermany's engineering sector expects a modest 1% production recovery in 2026, amid trade conflicts and economic reforms, according to VDMA.
BERLIN (Reuters) -Germany's engineering companies expect production to recover only slightly next year from the pummelling that high costs, global uncertainty and a trade war are set to have on this year's level, according to the VDMA sector lobby on Tuesday.
Production will grow by only 1.0% in 2026, said the VDMA, with the caveat that major reforms promised by the German government for this autumn actually take effect.
"However, there are considerable risks," said the VDMA, including a further intensification of trade conflicts, rising government debt and punitive tariffs on steel and aluminium.
Those factors led the VDMA to slash its 2025 outlook, with the German lobby now expecting a 5% production decline in real terms versus the 2% fall it had forecast earlier this year.
Tariffs have hit the industry hard, with several companies that work with metals stopping exports to the United States due to the risk entailed in documenting steel and aluminium origins.
"The EU must make it clear to the U.S. that our machines enable American production and export - and are therefore exempt from punitive tariffs," said VDMA president Bertram Kawlath.
In addition, the VDMA called on the German government to take a political response to China, the industry's largest global competitor, and create a strong domestic market, because "the wind is blowing ever harsher in our faces", he said.
(Reporting by Tom Kaeckenhoff and Miranda Murray, Editing by Rachel More)
The VDMA expects production to grow by only 1.0% in 2026, contingent on major reforms promised by the German government.
Factors include high costs, global uncertainty, trade conflicts, rising government debt, and punitive tariffs on steel and aluminium.
The VDMA has slashed its 2025 outlook, now expecting a 5% production decline in real terms, compared to the earlier forecast of a 2% fall.
The VDMA president stated that the EU must clarify to the U.S. that European machines support American production and should be exempt from punitive tariffs.
The VDMA calls for a political response to China, the industry's largest competitor, and emphasizes the need to create a strong domestic market.
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