The foundry industry in Germany generates a turnover of around 12 billion euros, around ten per cent of which comes from foreign trade with the USA. The value of exports actually directly affected by customs duties amounts to around 228 million euros. This corresponds to less than two per cent of the industry's total turnover.
- 04/29/2025
- Report
- Markets & Industries
Poker game with consequences: What US tariffs mean for the foundry industry
The German and European foundry industry is facing new challenges since the US government introduced (and then suspended) import tariffs on aluminium and steel. But what will be the actual impact of the tariffs, should they be imposed? EUROGUSS 365 has learnt from the Federal Association of the German Foundry Industry that the answer to this question is nuanced.
Direct effects: comparatively small market
The reason: the USA is an important export market for German foundries, but by no means the main one. The majority of cast products remain in the German or European domestic market: "The main business of most foundries is not in the USA. Many foundries serve specialised niche markets and have a broad customer base, which mitigates the risk of individual trade barriers," explains Johannes Kappes, Head of Raw Materials at the BDG in an interview with EUROGUSS 365.
An important differentiation can be seen in the automotive-related business in particular: German OEMs mostly export vehicles in the upper price range to the USA - vehicles for which a price increase due to tariffs is unlikely to reduce demand in the medium term. "In the high-price segment - such as a Porsche or a Mercedes S-Class - the surcharge is more likely to be accepted. In the low-price segment, on the other hand, the effect is massive. But it is precisely these low-priced models that German car manufacturers rarely export to the USA anyway," explains Kappes. Other manufacturers take advantage of opportunities to circumvent import duties via their plants in Mexico or Canada, for example.
Indirect effects: global competitive pressure
However, the real risks for the casting industry lie less in the direct export business and more in the indirect effects. Possible shifts in production and trade flows are particularly dangerous: rising tariffs in the USA could lead to more and more Asian manufacturers looking for alternative sales markets in Europe. Johannes Kappes emphasises: "The tariffs, which affect us by 10, 20, 25 percent, that's one thing. What will affect us more in the future are the tariffs of 125 to 145 per cent that the USA has imposed on China."
The massive tariffs on Chinese goods will lead to Chinese producers increasingly diverting their products to Europe. As a result, European foundries are coming under pressure from two sides - from more difficult US business and growing competition from the Far East.
Uncertainty as the greatest risk
As important as the discussion about tariffs, locations and raw material prices is, the BDG believes that uncertainty about future developments is currently the greatest burden on the industry. Many questions remain unanswered: Will the US tariffs hold? Will there be further tightening? How will the EU react and how will global material flows change? Recent experiences with the pandemic and war have made the industry more crisis-proof, but many companies are acting with increasing caution.
"We no longer have any planning security whatsoever," emphasises Kappes. Nervousness in companies has increased noticeably. The lack of clarity about future political decisions, short-term price movements and possible shortages of raw materials in particular is causing many companies to take a wait-and-see approach and putting the brakes on investments.
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Raw material flows: figures and trends
Another consequence of the uncertainty can be seen in the raw materials market. The availability of primary aluminium in Germany currently remains largely stable despite higher prices. In 2024, around 700,000 tonnes of aluminium were processed into cast products in Germany, while the production of primary aluminium was around 300,000 tonnes. Demand is largely covered by imports - primarily from Eastern Europe, Switzerland and the Netherlands.
The market for aluminium scrap is dynamic: in the worst case scenario, US companies could withdraw aluminium scrap from Europe at record prices in future, while the domestic industry is left empty-handed. "There are currently two competing opinions on this. Aluminium scrap prices have almost doubled in recent months," says Kappes. There are no acute shortages yet - but the risk is real.
With a view to ensuring a stable supply in the long term, the EU is working on greater diversification of its raw material sources. Strategic partnerships with traditional bauxite-producing countries such as Australia, Indonesia and Guinea are on the agenda. In Australia, for example, negotiations are currently underway on extensive raw material agreements in order to become less dependent on individual suppliers.
Appropriate EU response
How should Europe respond to the tariff poker? Kappes welcomes the EU's graduated and coordinated approach. "The EU's countermeasures are currently the right thing to do. They were weighed up and the measures were implemented live in two stages," he says. A ‘race of tariffs’ is not beneficial to anyone in the long term. His appeal to politicians is clear: "We must have functioning transatlantic relations. We cannot have a tariff war. We need the dismantling of tariffs in the long term."
Although German and European foundries are not currently at the epicentre of the trade conflict, the dynamics of the global markets and political uncertainty are increasing the pressure to adapt enormously. The direct effects of the US tariffs are still manageable - but uncertainty remains the most dangerous opponent. "The most positive thing is that we are not burdened with extreme percentages of direct business in the USA," summarises Kappes, "but the lack of predictability is a problem that affects everyone."