Translation. Region: Russian Federal
Source: People’s Republic of China in Russian – People’s Republic of China in Russian –
Source: People’s Republic of China – State Council News
BERLIN, May 9 (Xinhua) — Germany’s manufacturing sector, long the backbone of Europe’s largest economy, is feeling the impact of new U.S. tariffs, with small and medium-sized exporters sounding the alarm over rising costs, shrinking profits and growing uncertainty.
At the medium-sized gearbox manufacturer Tornado Antriebstechnik GmbH in northern Berlin, the production lines are running non-stop. In 2024, the company delivered 160,000 custom-made units, of which around 15 percent were destined for the US market. However, the recent tariff hikes have disrupted this flow, increasing cross-border costs and complicating investment planning.
“We simply cannot cover these costs indefinitely,” said CEO Norbert Mensing, noting that the company has been forced to shift some of the burden onto its customers. “We were planning to develop in the American market, but now we are moving in a different direction,” he explained.
Despite having a subsidiary in the US, some key components of the Tornado were subject to high tariffs, significantly increasing the overall cost of production. The company’s plans to expand production in the US are now on hold.
“Due to the unpredictability of US trade policy, we are considering the possibility of curtailing our activities in this country and reorienting investments to the domestic market,” explained N. Mensing.
Tornado’s predicament reflects broader concerns among German manufacturers, many of whom see unpredictable trade policies as a major threat to stability. The latest tariffs, dubbed “equivalence tariffs” by the Donald Trump administration, have introduced new risks into long-established transatlantic supply chains. German companies say the tariffs, intended to address trade imbalances, have actually increased uncertainty and dampened investment appetite.
LOWER MARGINS, SLOWER GROWTH
Germany’s export-oriented economy remains highly vulnerable to external shocks. While industrial giants like Volkswagen and Mercedes-Benz have the flexibility to shift production around the world, smaller manufacturers like Tornado have far less ability to cope with the fallout.
The fears are spreading across Germany’s industrial heartland. The country has a vast ecosystem of so-called “hidden champions” – small and medium-sized companies that have succeeded in niche markets. These companies thrive on precision engineering, long-term strategic planning and robust cross-border supply chains.
For many of them, massive tariff hikes by the US and increasingly unpredictable trade policies are not just a blow to profits. They are shaking the foundations of the global production and supply chains on which these companies rely to remain competitive.
Economist Hermann Simon, who coined the term “hidden champions,” noted that in today’s world, tariffs are no longer just price mechanisms — they have become structural disruptors. “Supply chains are so tightly intertwined that even small disruptions can have far-reaching consequences,” he told Xinhua.
For companies built on trust, stability and global connectivity, uncertainty itself is more damaging than regulation, Simon warned.
BREAKING TRUST
Recent data confirms the growing concerns. In April, 28.3 percent of German companies surveyed by the Ifo Institute for Economic Research reported a deterioration in business conditions, the highest figure since late 2022. US trade policy was cited as the main external risk.
That same month, Germany’s federal government cut its 2025 GDP growth forecast to zero, after falling in 2023 and 2024. If confirmed, it would mark the country’s first three-year economic contraction since World War II. Officials cited U.S. tariffs as a major factor in the revised forecast.
According to estimates by the Institute of German Economy, if current tariffs remain in place until 2028, Germany’s total losses could reach 290 billion euros (about 325.48 billion US dollars), which is about 1.2 percent of annual GDP.
The report notes that such tariff policies are becoming a catalyst for global economic turmoil, undermining investment confidence and hindering the coordinated development of industrial ecosystems around the world.
“Many companies’ investment projects are being postponed or cancelled,” says G. Simon. “When companies stop expanding and start waiting, it sets off a chain reaction that can become a systemic brake.”
INTERDEPENDENCE AND RISK
Despite rising tensions, economic ties between the United States and Germany remain strong. In 2024, the United States accounted for 10.4 percent of German exports, the highest level since 2002. Last year, Germany also posted a record trade surplus with the United States of €69.8 billion.
But German executives warn that unpredictable trade policy is undermining trust in the global rules-based trading system. In a world of tightly interconnected supply chains, sudden changes not only cause disruptions, they threaten the foundations of long-term industrial cooperation.
This is particularly acute for mid-sized manufacturers like Tornado, which are often referred to as the “backbone” of the German economy. Unlike global multinationals, such firms cannot easily relocate production or overcome geopolitical upheavals. Their competitiveness depends on a stable environment, long-term investments and deeply integrated supplier networks.
In the current circumstances, Germany faces significant challenges: it must uphold open market principles, restore confidence in industry and support its manufacturing sector in a world where economic certainty is increasingly difficult to find.
While the US justifies its “equivalence tariff” policy on the principle of fairness, critics argue that this approach puts national interests above global stability. This could have the opposite effect, disrupting supply chains and harming American consumers. –0–