The latest quarterly report from trade body Scottish Engineering shows industry exports are at negative levels unseen since 2016, dropping to a balance of -13 points from +5 in the previous quarter.
Overall output volume and business optimism in the sector also slipped below zero for the first time in three years.
Scottish Engineering cited a “deep concern across industry that the new prime minister and cabinet are following a course with an unacceptably high probability of a no-deal Brexit”.
Staffing levels crept higher in the quarter, indicating investment in people and skills.
Three in ten engineering companies reported reliance on the availability of non-UK nationals in the workforce, while six in ten rejected the UK government’s proposed salary threshold of £30,000 for eligible roles.
Chief executive Paul Sheerin said: “The stark reality is that no-deal means wasted resource to secure work arounds, added costs for zero value and material uncertainty in business sustainability.
“The UK’s current position seems unthinkable, in that we have a situation where the government appears to be ignoring the very people and businesses – who actually understand what it takes to import and export the goods that sustain our society and economy. And they are saying quite clearly – whatever else you do, don’t do this.”