HANOVER, Germany — Tensions between Berlin and Brussels over artificial intelligence regulation sharpened on Tuesday as European Commission representatives responded to Chancellor Friedrich Merz's weekend remarks calling for less stringent EU AI rules for industrial applications. The dispute, playing out against the backdrop of the ongoing Hannover Messe industrial technology fair, underscores a deepening fault line within the EU over how aggressively to regulate AI in manufacturing and critical infrastructure.

Merz, speaking Sunday at the world's largest industrial technology exhibition, argued that overly rigid compliance requirements under the EU AI Act risk throttling German and European manufacturers at a moment when competition from the United States and China is intensifying. His comments were welcomed by major exhibitors including Siemens, Bosch, and SAP, all of which have lobbied for exemptions or streamlined conformity assessments for AI tools deployed in factory automation and logistics.

European Commission officials, however, signalled Tuesday that they were unwilling to carve out broad sectoral exemptions, with one senior digital policy official stating that the AI Act's risk-based framework already provides flexibility for low-risk industrial deployments. The Commission reiterated that high-risk categories — including AI systems managing critical infrastructure — must retain robust human oversight requirements, regardless of member-state pressure.

Industry groups at Hannover Messe argued the regulatory uncertainty is already having measurable consequences, with several mid-sized German manufacturers reporting delays in deploying AI-driven quality-control systems pending legal clarity. The German Mechanical Engineering Industry Association (VDMA) released a survey Tuesday showing that 61 percent of its members consider EU AI compliance costs a significant barrier to adoption over the next 18 months.

Analysts said the public disagreement between Berlin and Brussels is unlikely to produce immediate legislative change but could accelerate negotiations over the AI Act's implementing regulations, which are still being finalised. 'Merz has given political cover to a debate that industry has been having quietly for months,' said one Brussels-based technology policy analyst. 'The question now is whether Germany can bring enough member states along to shift the Commission's position before the implementing acts are locked in.' The dispute is expected to dominate the final days of Hannover Messe and spill into upcoming European Council discussions on competitiveness.