German engineering orders hit by tariff uncertainty in August

BERLIN, Oct 1 (Reuters) - German engineering orders fell in August, dragged down by uncertainty created by the United States' tariff policy that has the industry bracing for difficult months ahead, the VDMA engineering association said on Wednesday.

Overall orders dropped by 7% year on year in August, with domestic orders down 5% while those from abroad were down 8%.

There was a clear gap between demand from the euro zone, which increased 12%, and that from outside the currency bloc, which tumbled 15%.

"The unpredictable U.S. tariff policy is likely to have led to a noticeable reluctance to place orders," said VDMA chief economist Johannes Gernandt.

"This uncertainty will continue to weigh on our industry in the coming months," he added.

The VDMA this month slashed its 2025 outlook and now expects a 5% decline in production after earlier predicting a 2% fall.

In the less-volatile June-to-August period, orders overall fell 2%, with domestic contracts dipping 3% and foreign ones down 2%.

Euro zone orders grew 9% in the period while there was a 6% decrease from non-euro zone partner countries.