Merz Marks One Year in Office Amid Deepest Transatlantic Crisis in Decades

Key facts

• Friedrich Merz was sworn in as German Chancellor on May 6, 2025.
• President Trump announced 25% tariffs on European auto imports and a withdrawal of thousands of U.S. troops from Germany.
• The moves follow Trump's angry reaction to Merz's criticism of U.S. strategy in the Iran war.
• Germany has been in recession for two years, with a fragile recovery threatened by the Iran conflict's energy shock.
• Opinion polls now put the far-right Alternative for Germany (AfD) ahead of Merz's conservative bloc.
• Finance Minister Lars Klingbeil, head of the SPD coalition partners, warned Europe is not strong enough and depends on Germany.

A Year of Crises

Chancellor Friedrich Merz marks his first year in office this week confronting the most severe rupture with Washington in decades. On Friday, President Donald Trump announced 25% tariffs on European auto imports and a plan to withdraw thousands of U.S. troops from Germany, retaliating against Merz's public criticism of American strategy in the Iran war. The twin blows underscore the accelerating breakdown of transatlantic relations during Trump's second term and compound the challenges facing the German leader.

Tariffs and Troop Withdrawal

The tariff hike, from 15% to 25%, targets Germany's automotive industry, the backbone of its industrial base, which is already struggling with fierce competition from China. The troop pullout, whose scale remains unspecified, would further erode the post-war security architecture. Both decisions were announced after a tense exchange in which Merz questioned U.S. military actions in the Iran conflict, prompting Trump's angry response.

Domestic Discontent and Coalition Strains

Merz's conservatives are now trailing the far-right Alternative for Germany (AfD) in opinion polls, a reflection of growing public unease. In an interview with German public television on Sunday, Merz acknowledged the doubts, saying, 'The doubts are growing. Not about me, but about the coalition.' His promised package of tax, welfare and health reforms has been overshadowed by infighting within the coalition, which includes his Social Democrat partners led by Finance Minister Lars Klingbeil.

Economic Headwinds and Energy Shock

Germany has endured two years of recession, and a tentative recovery now risks being extinguished by the energy shock from the Iran conflict. The country's carmakers, already squeezed by Chinese competition, face a sudden tariff increase on exports to one of their most important markets. Klingbeil told Reuters, 'We can see what's going on with Donald Trump and the U.S., and that this is having an impact. We can see that China is getting stronger and stronger. We can see that Europe isn't strong enough. In this regard, a great deal depends on Germany.'

Merz's Foreign Policy Record

For much of his first year, Merz compensated for domestic discontent with a relatively assured performance abroad, earning a reputation as one of the few European leaders to establish a good personal relationship with Trump. Political scientist Oliver Lembcke of Ruhr University Bochum noted that Merz 'has strengthened key relationships, particularly with France and Poland, and has secured European influence in the context of the war in Ukraine through forums such as the E3.' However, Lembcke added that Merz's main problem remains at home.

Stakes for Europe and Germany's Role

The transatlantic crisis places Germany at the center of Europe's response to an increasingly assertive United States and a rising China. Klingbeil's warning that 'a great deal depends on Germany' highlights the pressure on Merz to reconcile domestic reform with foreign policy leadership. The coalition's ability to deliver on promised reforms will be crucial for restoring public confidence and countering the far-right's rise.

Outlook and Open Questions

Merz enters his second year with his coalition under strain, the economy fragile, and the transatlantic partnership in tatters. Whether he can leverage his foreign policy gains to stabilize his domestic standing remains uncertain. The tariff and troop decisions will test his ability to negotiate with Trump while maintaining European unity. The coming months will reveal whether Merz can reverse his party's slide in the polls and push through the reforms Germany urgently needs.

The bottom line

• Trump's 25% auto tariffs and troop withdrawal from Germany mark the worst transatlantic crisis in decades, triggered by Merz's criticism of U.S. Iran strategy.
• Germany's car industry, already hit by Chinese competition, faces a severe blow from the tariff hike.
• Merz's conservatives have fallen behind the far-right AfD in polls amid coalition infighting and a stalled reform agenda.
• Finance Minister Klingbeil warns Europe is not strong enough and that Germany must shoulder the burden.
• Merz's foreign policy successes, including strong ties with France and Poland, have not translated into domestic support.
• The coalition's ability to pass tax, welfare and health reforms will be critical for Merz's political survival.