The machinery sector in Germany also went into crisis
Mechanical engineering, one of the three main sectors of the German industry, announced heavy losses in production and the threat of further losses.
According to the industry union VDMA, a decrease of about five percent in production is expected this year. The Union calculated a seven percent production decline according to the price adjustment for 2024.
VDMA also expects additional losses in exports to the US: The Trump administration wants to expand the list of machines that impose a 50 percent customs duty on steel imports. In this case, 56 percent of all machinery exports by Germany to the USA will be affected.
Germany's number one (automotive) and number three (chemical) industries had already suffered serious losses. The market share of the three major German automotive groups in the world's three most important markets (China, USA, Europe) decreased from 21.7 percent to 19.3 percent.
Moritz Schularick, head of the Kiel Institute of World Economy, thinks that three automotive giants “may no longer exist at the end of the decade”.
In the chemical industry, production fell by 5 percent in the last.
Automotive, which is still the most important sector of the German economy, has been in crisis for a long time. Germany's three major car manufacturers Volkswagen, BMW and Mercedes' sales in the three most important markets worldwide, namely China, the US and Europe, fell by more than 5 percent between January and August 2025.
As a result, the market share of German industrial giants fell from 21.7 percent to 19.3 percent. The market share of German companies, especially in China, has decreased sharply from 22.6 percent to 16.7 percent in the last two years.
According to Stefan Bratzel, head of the Automotive Management Center at Bergisch Gladbach, the main reason for this is that German companies “largely underestimate” how quickly Chinese competitors will bring technically and price-appelling electric car models to the market.
Accordingly, in the Chinese electric car market, which has an impressive growth of 60 percent, Volkswagen's electric car records have dropped by 21 percent, BMW by 37 percent and Mercedes by 58 percent.
German automotive centers now also face 15 percent customs duty on deliveries to the USA. Between 2014 and 2024, their exports decreased by 26 percent to 3.2 million vehicles. The customs duties imposed by the USA indicate an even further decline in German automotive exports.
This is a serious blow as the USA is the largest export market of the German automotive industry. This situation, among other things, also causes more employment loss in the sector.
According to a study by the German Institute of Economics (IW), about 55,000 jobs have been lost since 2019 and another 90,000 jobs are likely to be lost by 2030. IW states that this corresponds to a loss of employment of 7.8 percent.
Economists now openly express doubts about the future of the sector. For example, on Sunday, Moritz Schularick, president of the Kiel Institute of World Economy (IfW), warned that the industry is about to miss autonomous driving, the “next revolution.”
Schularick thinks it is quite possible that the three giants of the industry, Volkswagen, BMW and Mercedes, will "no longer exist in their current state at the end of the decade".
The German chemical industry also suffers from serious structural problems. The industry is negatively affected by rising natural gas prices, especially due to the decomption of low-cost Russian pipeline gas and the transition to expensive liquefied gas, often imported from the US.
Therefore, German chemical production, excluding the pharmaceutical sector, decreased by approximately 10 percent from 2021 to 2022, and by 11 percent from 2022 to 2023.
According to the German Chemical Industry Association (VCI), production was again 5 percent less in the second quarter of 2025 than in the same quarter of the previous year.
Facility capacity utilization is currently an average of 71 percent, which is well below the estimated profitability threshold of about 82 percent.
It is said that the sector produces at the "lowest level since 1991".
In addition, the trade agreement signed by the European Commission with the Trump administration makes it possible for the US industry to compete with its EU competitors in the European market by exempting US deliveries to the EU from customs duties.
German chemical companies are making great efforts to keep their own customs duties, at least Chinese competitors away.
The German mechanical engineering industry was also seriously affected by the crisis. The industry initially managed to grow again after the decline caused by the coronavirus pandemic, but this phase ended in a decline in sales and production for the first time in 2024.
According to the German Engineering Federation (VDMA), price-adjusted production of German engineering companies decreased by about 7 percent in 2024 compared to 2023.
The association estimates that production will decline by more than 5 percent this year.
In addition, orders are also decreasing. According to the statement made by VDMA yesterday (November 3), the companies in the sector recorded a decrease of 5 percent in domestic orders and 24 percent in foreign orders compared to the same period last year in September.
Orders from Eurozone countries decreased by only 13 percent, while orders from countries outside the Eurozone decreased by 27 percent.
Sharp declines in September are said to have been twisted upwards by special effects such as particularly high orders in September 2024, but total orders in the third quarter were also 6 percent below the previous year's figure.
VDMA predicts that the recently signed trade agreement between the EU and the USA will bring an additional burden to the sector.
This situation is a big burden, as 27.4 billion euros of the US' total exports of 200 billion euros, which was the most important sales market for German mechanical engineering companies last year, went to the USA, 17.7 billion euros to China and 13.3 billion euros to France.
In August, the Trump administration extended its 50 percent tariff on steel imports to a range of products containing steel, with about 40 percent of all machinery exports from the EU currently affected.
According to VDMA, Washington plans to expand the list of products subject to a 50 percent tariff by the end of the year, which, according to the association, will affect 56 percent of all German machinery exports.
VDMA President Bertram Kawlath describes this measure, which is not included in the trade agreement with the EU, as a clear "trick" and demands a response from the EU.