German mechanical engineering companies have used unusually harsh words to warn of the possible consequences for the industry if Donald Trump becomes president of the USA - their largest export market.

"It is an isolationist economic policy that is being prepared there," said the President of the German Engineering Federation (VDMA), Karl Haeusgen, at the annual press conference in Frankfurt on Tuesday. "There will certainly be new tariffs between Europe and the USA." The positive achievements of the administration of current US President Joe Biden would quickly disappear. "We are looking at this very, very skeptically."

The association has not yet produced a detailed analysis, Haeusgen explained. "If you ask me personally, what is the biggest realistic risk scenario for the global economy of the mechanical engineering industry, then it is actually Trump's election victory at the moment."

Manufacturers of machines "Made in Germany" sell around three quarters of their systems abroad. The USA has been the most important foreign sales market for years, ahead of China, for the

industry, which includes numerous SMEs as well as listed companies such as Thyssenkrupp, Siemens and Gea. Mechanical engineering companies in the USA have benefited in particular from the increasing demand for green technologies.

INDUSTRY EXPECTS PRODUCTION TO FALL BY FOUR PERCENT IN 2024

Haeusgen sees this at risk if Trump wins the US elections in November next year. "The Trump team has already announced that, from their point of view, the nonsense about climate change will stop." Investments would then not flow into this sector. "And this is a sector in which German mechanical engineering is very well positioned." This applies to machine tools and components for wind energy or solar systems, for example. If more oil and gas were to be produced in the Gulf of Mexico again, the German mechanical engineering sector would not benefit to the same extent.

The industry, which employs more than one million people, is already struggling with weakening demand, which is why it is more pessimistic about the new year than before. Production is likely to fall by four percent in 2024. A drop of two percent had previously been expected. "The ongoing slump in the global economy is also leaving increasingly clear traces in mechanical and plant engineering," said Haeusgen. However, the good level of production up until the summer means that it will probably only shrink by one percent this year instead of the previously expected two percent.

(Report by Tom Käckenhoff, edited by Ralf Banser; if you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).