Germany: Between A Rock And A Hard Place

Donald Trump’s reelection has particular importance for Germany. The country was front and center during his 2016 campaign and again this time. In both cases, the country was cast in a negative light. Trump has never been shy about publicly shaming Germany on the Nord Stream gas pipeline and migration, trade, and defense policies. A second Trump administration will be an even rougher ride.

Chancellor Olaf Scholz has been a close partner to the Biden administration. His government has been in lockstep with Washington on support for Ukraine and is now meeting its NATO spending commitment. In addition, Germany was a crucial ally in obtaining the release of Wall Street Journal reporter Evan Gershkovich and other political prisoners held in Russia.

Scholz has had no qualms about describing Joe Biden as a friend. This will not endear him to a reelected Trump who is likely to disrupt transatlantic security, whether on issues relating to Ukraine, NATO, or trade. Germany’s Institute for Economic Research projects the country could lose approximately €120 billion, if not more, over four years if Trump implements the tariffs that he threatened in his campaign. Germany has built its strength on being a motor for exports. Its playbook for prosperity is now on shaky ground with the prospect of these tariffs, coupled with an economic slump at home.

Trump’s victory does not bode well for a Germany that is dependent on US security and thrives on open markets. And uncertainty in Europe’s largest economy is not ideal when the EU needs to find its place in a world in which the US president is not expected to support the traditional, rules-based international order.

Berlin’s odd, governing bedfellows—the center-left Social Democratic Party, the Greens, and the liberal Free Democrat Party (FDP)—entered office with enthusiasm and ambition. Their honeymoon ended with Russia’s 2022 full-scale invasion of Ukraine and last year’s constitutional-court decision forcing the coalition government to amend its budget. The result is wobbly leadership that appears to be on the brink of collapse.

Some in Germany now call for new elections, warning that this dysfunctional coalition is no match for a second Trump administration. The FDP seems to hold the cards on that issue while it clings to Germany’s constitutional debt brake. Will it pull out of the coalition or stick with it? The party’s commitment to fiscal discipline may boost its fortunes in the next general election, but it could also be a strike against a Germany in dire need of new thinking and economic stimulus just as a challenging period for transatlantic relations arises.