German engineering manufacturers face sharp order decline amid global trade crisis
Germany’s mechanical engineering sector recorded a steep 19 percent year-on-year drop in new orders in September 2025, reflecting ongoing strain from the global trade crisis and weakening industrial demand, according to the German Engineering Federation (VDMA).
The decline also contributed to a slight contraction in total orders for the first nine months of the year.
Base effects mask deeper structural weakness
VDMA chief economist Dr. Johannes Gernandt said that part of the year-on-year decline stemmed from base effects, as September 2024 had benefited from large-scale plant orders that did not recur this year. “That should not obscure the fact that the machinery and equipment manufacturing industry continues to experience a noticeable slump in demand and underutilization,” Gernandt warned.
He stressed that a sustainable recovery depends on resolving global trade disputes, including US punitive tariffs, and on structural reforms in Germany and Europe to reduce cost burdens and stimulate investment.
The federation reaffirmed its forecast of a five percent contraction in real production for 2025.
Foreign demand collapses, euro zone more resilient
The September 2025 figures show a five percent drop in domestic orders and a 24 percent drop in foreign orders. Orders from euro zone countries fell by 13 percent, while those from non-euro zone countries decreased by 27 percent.
In the third quarter of 2025, overall orders were six percent lower than a year earlier, with domestic orders down by three percent and foreign orders down by seven percent, while orders from euro zone countries and non-euro zone countries fell by two percent and by nine percent, respectively, all on year-on-year basis.
In the January-September period of this year, total orders edged down by one percent compared with the same period last year, while euro zone orders increased by 10 percent and non-euro zone demand fell five percent, both on year-on-year basis.
US manufacturers confirm steel tariff-driven operational impediments
Operational upheaval caused by the recent bloat in US domestic steel prices and government tariff policies is seen as detrimental to various US businesses reliant on steel, Kallanish reports.
US farm equipment manufacturers, fabricators and automakers contend that President Donald Trump’s trade measures will impede growth and productivity in their respective industries.
Agriculture and construction equipment advocacy group Association of Equipment Manufacturers (AEM) unequivocally renounces any perceived benefits to those two sectors. Any significant increase in steel prices has a ripple effect, and the cross-border nature of steel and agricultural commodities and inputs means that everyone in the supply chain would be hit with higher costs, AEM argues.
“The fact remains: Tariffs are a tax paid by Americans, and their broad-based application will stifle economic growth and undermine the competitiveness of the United States,” AEM senior vice president Kip Eideberg says in a statement.
A Northern California-based agriculture original equipment manufacturer (OEM) tells Kallanish that the complications involved with the tariffs are farther-reaching than he initially expected. His projected growth plan for the business may be stifled.
“When everyone starts panic buying and we can’t get quotes on steel that’s already like 20% higher than when I quoted my customers, there’s no choice but to get steel and pay the tariffs. Some of the components and parts we use are only made outside the US, so that will cost more than before too,” the OEM owner comments. “That raises base product prices on machines that are six-figures, plus if I go to export a machine, it’s gonna cost a Canadian customer even more. Why wouldn’t someone just open their own business there? These machines should last more than 30 years, so how many am I gonna sell in just the US?”
Service centres and distributors across the US note that most domestic flat-steel mills closed order books and pushed lead times into in April. Nucor’s published price for hot-rolled coil has shot up to $820/short ton, an increase of $70/st just since early January. SSAB Americas increased all steel prices by a minimum of $100/st last week. On Friday, Cleveland-Cliffs increased its HRC base price to $900/st after maintaining a consistent $800/st level since December.
Service centres seem “a little apocalyptic,” states the co-owner of an Oregon-based custom metal fabrication studio focused on structural and ornamental steelwork for residential and commercial projects.
“We already changed our agreements to five-day guarantees because that’s all our reps guarantee us. We have to charge a lot for the jobs we do and now customers don’t know if they want to pause or try to book us now and hope they can still afford the job when it comes time to start. It can take more than five days for them to even decide. Now, if I can’t even get steel, I don’t know what we will do. It’s very stressful. If we shut down then that’s less steel sold to anyone. Probably isn’t what anyone thought was going to happen but that is what will happen to us,” says the fabricator.
US automakers including Ford Motor and General Motors (GM) have voiced concerns about increasing costs to manufacturing and the uncompetitive pricing they may be forced to impose on consumers. At an automotive conference last week, GM chief financial officer Paul Jacobson floated the potential of relocating some of the company’s facilities.
“Those are questions that just don’t have an answer today, because (what) I can tell you is, as much as the market is pricing in a big impact of tariffs and lost profitability, we think about a world where on top of that, we’re spending billions of dollars in capital. So we can’t be whipsawing the business back and forth,” Jacobson stated bluntly.
Kristen DiLandro USA
