Third year without growth
In 2025, the Dutch industry is once again experiencing a weak year. For the third consecutive year, the sector—heavily dependent on international trade—remains stagnant. Causes include geopolitical tensions, uncertainty surrounding trade barriers, and persistently high energy costs. A brief upturn at the beginning of the year, fueled mainly by additional demand from the United States, was quickly offset by new trade threats. According to ING Research’s Industrial Outlook, structural growth is not expected until 2026, provided international tensions ease.
Hope for recovery in 2026
The threat of new U.S. import tariffs is dampening global business and consumer confidence, slowing down trade. Yet, there are bright spots: higher defense spending, large-scale investment programs in Germany, and growing demand for advanced technology—such as chip-making machines—are creating better prospects. The recovery of purchasing power may also help. If the EU and the U.S. succeed in forging sustainable trade agreements, the industry could return to growth in 2026.
Consequences of a failed trade deal
If no trade deal is reached, European and American consumers and companies will likely face higher prices. The EU is expected to respond with countermeasures, which would put further pressure on exports. For Dutch industry, exports to the U.S. account for only about 7%, but for the EU as a whole, the U.S. represents 20% of exports outside Europe. Since the U.S. market has grown in recent years, a slowdown would be noticeably painful.
Strong start led by pharmaceuticals
Surprisingly, 2025 began well. Production grew by 0.8% in the first quarter, the largest quarterly increase in almost three years. The pharmaceutical industry led the way, with output up 30% compared to the final quarter of 2024. Exports of medicines to the U.S. quadrupled. Machinery, equipment, and metal products also sold well across the Atlantic.
Peak proves temporary
However, this growth did not last. Early this year, U.S. buyers stockpiled extra supplies out of fear of higher tariffs, leading to a sharp drop in imports in April (-20% compared to March). Although the announced reciprocal tariffs of 20% were postponed, the market remained nervous. In April, Dutch industrial production shrank by more than 1%, wiping out much of the first-quarter gains.
Trade tariffs remain a barrier
Without stable trade relations between the EU and the U.S., recovery will remain fragile. Even if a deal is reached, tariffs are likely to stay high. Currently, import duties average between 10% and 15%, with peaks such as 25% on vehicles and parts, and recently up to 50% on steel and aluminum. New tariffs on trucks, medicines, and airplanes are in preparation, further complicating international trade flows.
Vulnerable supply chains
Beyond tariffs, shifting trade routes and changing procurement practices are causing delays in logistics and production. Global supply chains are so interconnected that disruptions directly result in longer delivery times, port congestion, and higher transport costs. The rise of cheap Chinese products—from steel to electric cars—adds further price pressure on European manufacturers.
Positive signals from Germany and the defense sector
There are also some bright spots. Germany is investing heavily in infrastructure, digitalization, and renewable energy, which will eventually boost industrial activity. German producers are slightly more optimistic than their European counterparts, and the Dutch purchasing managers’ index reached its highest level in over a year in June.
In addition, rising defense spending is stimulating the sector. The European Commission plans to invest an additional €800 billion, while NATO has agreed to spend 3.5% of GDP annually on defense. The Dutch defense industry nearly doubled its turnover in five years to €9.3 billion in 2024 and could grow further to over €16 billion. Although relatively small, this sector is currently making an important contribution to the industrial revival.
Source: creditexpo.nl
Photo: Shutterstock
