‘Protectionism not viable for US and trade partners in the long-run’: VDMA

German machinery exports to USA fell by 3.4 percent between January and October 2016, and by nearly 5.8 percent in the period between August and October, according to Germany’s Mechanical Engineering Industry Association (VDMA).

The US will continue to be the largest single export market for German mechanical engineering companies in 2017, however, it remains to be seen how President Donald Trump will shape global trade.

“Protectionism and new trade barriers will not result in new jobs and additional growth – neither for the USA nor for its trade partners,” said VDMA Executive Director Thilo Brodtmann.

Imported machinery account for more than a third of the US market since American machinery manufacturers are unable to compete at an international level in many mechanical engineering sectors. Machine deliveries from Germany rank fourth place and play a considerable part in fostering the American industry’s competitiveness.

“In the medium and long term, however, such coercive state policies will lead to investors looking for opportunities elsewhere – which ultimately translates to losses in economic prosperity,” said Ulrich Ackermann, Head of the VDMA Foreign Trade department. He is doubtful if these methods will be helpful in breathing new life into the barren American industrial regions that Trump referred to in his promises.

In any case, a unilateral increase in import tariffs for mechanical engineering products would be in violation of the rules stipulated by the World Trade Organization (WTO). After all, the USA is contractually bound to import tariffs of between 0 and 5 percent for mechanical engineering products. In accordance with WTO rules, imposing a so-called protective tariff would only be possible if proof could be provided of considerable damage to domestic manufacturers. But this is certainly not the case when it comes to mechanical engineering products from Germany and Europe.