With the re-election of former President Donald Trump to the White House and the collapse of the coalition government under German Chancellor Olaf Scholz, Germany finds itself facing an economically and politically uncertain future. 

During his campaign, Trump vowed to increase import tariffs on both allies and adversaries under the “Trump Reciprocal Trade Act,” which would impose tariffs matching the taxes enforced by each respective country.  

“If India, China, or any other country hits us with a 100 or 200 percent tariff on American-made goods, we will hit them with the same exact tariff,” he outlined in his campaign agenda. “If they charge US, we charge THEM—an eye for an eye, a tariff for a tariff, same exact amount.”

However, it remains unclear whether the president-elect still intends to implement these specific tariff increases, as he has also proposed a 10% tariff on imports from all countries, as well as 60% duties on imports from China, . 

China was not the only country in Trump’s sights, as the now president-elect also targeted the and warned the bloc would have to pay up.

“They don’t take our cars. They don’t take our farm products. They sell millions and millions of cars in the United States,” he told supporters at an October rally in Pennsylvania. “No, no, no. They are going to have to pay a big price.”

Some economic experts have warned that increasing tariffs – which are paid by , not by government entities – could lead to rising costs worldwide, including in the U.S., .

A report earlier this month by the German Marshall Fund (GMF) cited findings by Germany’s Institute for Economic Research in Cologne, estimating that the promised Trump tariffs would cost the country roughly . 

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

However, it is not only Germany’s faltering economy that could jeopardize Berlin’s international standing, as Scholz faces a vote of no confidence in January after dismissing his Finance Minister Christian Lindner and causing his coalition government to collapse. 

A confidence vote is now scheduled for December 16 in Germany – which Scholz, given his minority status, is expected to lose. 

The most likely next step would be for German President Frank-Walter Steinmeier to dissolve the parliament and call for elections, which are not anticipated to be held before Feb. 23, 2025.  

The EU now faces a potential trade war with the Trump administration while one of its leading nations, both geopolitically and economically, will essentially operate as a lame duck while Berlin awaits the outcome of the leadership race. 

German opposition leader Friedrich Merz – who could become the next German chancellor – has stated his intention to reach an agreement with Trump.

In an interview with Stern magazine, Merz reportedly said, “In Germany, we have never really articulated and enforced our interests well enough, and we have to change that.

“The Americans are much more on the offensive. It shouldn’t end with only one side profiting, but rather with us making good arrangements for both sides,” Merz said according to a Bloomberg report on the interview. “Trump would call it a deal.”