Customs Accord Impacts on German Industry: Immeasurable Harm Predicted by BDI
The recently finalized EU-USA customs agreement, effective from July 2025, has lowered U.S. import tariffs on most EU goods to a uniform 15%, providing noticeable relief to the export-oriented German industry, particularly the automotive sector. This reduction in tariffs reduces costs for German automotive exporters and is generally welcomed by German industry leaders, including Chancellor Friedrich Merz.
However, the agreement does not eliminate all tariffs. For instance, the 50% Section 232 tariffs on steel and aluminum still apply, impacting raw material costs for German manufacturers. Sectors like mechanical engineering and chemicals face higher costs and competitive pressures, and smaller and medium-sized enterprises (SMEs) without strong lobbying power in Washington face particular difficulties with tariffs. Negotiations are ongoing about these tariffs potentially being converted from tariffs to quota-based limits, which could help ease supply chain burdens.
To further improve the EU's economic competitiveness and reduce trade barriers more broadly, experts suggest several strategies:
- Dismantling internal EU market restrictions by half, which could significantly boost exports from German industry within most EU states.
- Further tariff reductions and elimination of non-tariff barriers in future treaty negotiations, especially in strategic industries like aerospace, chemicals, and semiconductor equipment, which are currently excluded from tariff cuts.
- Addressing digital trade barriers and maintaining zero customs duties on electronic transmissions to support modern trade flows.
- Encouraging local sourcing and reshoring manufacturing within both the EU and U.S. to reduce dependency and balance trade.
- Expanding and upgrading existing trade partnerships, such as Customs Unions with third countries (e.g., Turkey), could enhance economic resilience and access to global supply chains.
The agreement between the EU and the USA, as stated by Wolfgang Niedermark, a member of the management board of the Federation of German Industries (BDI), sends a signal that must not stand in the way of the EU's own economic strength. Niedermark emphasizes the need for everyone to pull together to stabilize transatlantic economic relations during this difficult phase. The agreed-upon agreement needs to become binding, as stated by Niedermark, to ensure a more predictable trade environment for companies on both sides of the Atlantic.
[1] BDI (2025). European Union - United States: The new customs agreement - opportunities and challenges for German industry. Retrieved from https://www.bdi.eu/en/position-papers/economic-policy/european-union-united-states-new-customs-agreement-opportunities-and-challenges-for-german-industry/
[2] Kraft, A. (2025). The EU-USA customs agreement: What it means for German exporters. Retrieved from https://www.handelsblatt.com/wirtschaft/europa-usa/die-eu-usa-zollabkommen-was-es-fuer-deutsche-exporteure-bedeutet/26323664.html
[3] European Commission (2025). EU-USA trade and technology council: Joint statement. Retrieved from https://ec.europa.eu/info/publications/eu-usa-trade-and-technology-council-joint-statement_en
[4] European Commission (2023). Customs Union between the European Union and Turkey. Retrieved from https://ec.europa.eu/taxation_customs/business/customs-unions/customs-union-between-european-union-and-turkey_en
- The agreed EU-USA customs agreement, while beneficial to the German industry, especially the automotive sector, raises concerns about the continued 50% Section 232 tariffs on steel and aluminum, which pose challenges for German manufacturers.
- Experts propose several strategies to further enhance the EU's economic competitiveness, including dismantling internal EU market restrictions, reducing tariffs in future negotiations, addressing digital trade barriers, encouraging local sourcing, and expanding trade partnerships like the Customs Union with Turkey.
- The European Union and the USA, aiming to strengthen transatlantic economic relations, should ensure a more predictable trade environment by making the customs agreement binding, as suggested by Wolfgang Niedermark of the Federation of German Industries (BDI).
