Trump’s swearing in: What Trump’s return means for Germany

Punitive tariffs on imports from Europe, pressure on defense spending, cuts in aid to Ukraine: We don’t know exactly yet, but there could be a lot in store for Germany when the new US President Donald Trump moves into the White House today. One thing is already certain: Whatever Trump does, it will have an impact on the federal election campaign, for which there are only five weeks left.

Trade: Hundreds of thousands of jobs at risk?

The biggest fears in Germany concern trade. During the election campaign, Trump announced import tariffs to strengthen the domestic economy. In Europe, they would particularly affect Germany as the strongest export nation.

“If these tariffs come, it will also cost jobs in Germany,” warns SPD parliamentary group leader Rolf Mützenich. “Overall, this would set the global economy back.”

A few days ago, the “Süddeutsche Zeitung” quoted a study by the Prognos Institute, according to which 1.2 million jobs in Germany depend on exports to the USA, of which 300,000 could be at risk from Trump’s tariffs.

The already struggling auto industry would probably be hit particularly hard. Almost every third Porsche and every sixth BMW were sold in North America in 2024; for VW, Audi and Mercedes-Benz the share was 12 to 15 percent each.

The EU’s reaction should not be long in coming. If things turn out as expected, the EU wants to respond with retaliatory tariffs on US imports in order to get Trump to come to the negotiating table. Even if a direct trade conflict between the EU and the US is avoided, new US tariffs against China could have an impact on Europe. They could lead to Chinese companies pushing more aggressively into the European market.

Ukraine: Does Germany have to fill gaps?

Trump boasted during the election campaign that he could end Russia’s war of aggression against Ukraine within 24 hours. He has since admitted that it could take six months. But that too is up in the air.

There is speculation that he may restrict aid to Ukraine to force Kiev to the negotiating table. As Ukraine’s second largest arms supplier after the USA, Germany could then come under pressure.

In recent days, Chancellor Scholz has expressed confidence that he will be able to find common ground with Trump on Ukraine policy. “So I don’t expect that there will be a cessation of US support for Ukraine in its defense,” he said just last Friday.

Aid to Ukraine is already a controversial topic in the election campaign. Scholz only wants to agree to further arms deliveries amounting to three billion euros if the debt brake is suspended. The Union, the Greens and the FDP are pushing for unscheduled budget spending. Exit open.

Defense spending: five percent of GDP instead of two?

Trump’s demands for more defense spending are already known from his first term in office from 2017 to 2021. At that time, he primarily urged Germany to meet NATO’s goal of investing two percent of gross domestic product in the military. This time he is demanding five percent before he takes office in order to deal with new threats. “They can all afford it,” he said of the allies at a press conference at his Florida home.

According to the latest NATO statistics, Germany reached the two percent mark last year for the first time in decades, albeit just barely. In purely mathematical terms, five percent would mean defense spending of significantly more than 200 billion euros in 2025 with an expected gross domestic product of 4,400 billion euros – with a planned total budget of around 489 billion euros.

Scholz has already made it clear that he is not ready for this. “That can only be achieved with massive tax increases or massive cuts for many things that are important to us.” However, Trump’s demands in the Chancellery are not taken lightly.

In NATO, the discussion about higher defense spending is already in full swing – but more in the direction of 3 or 3.5 percent. Green Chancellor candidate Robert Habeck and CSU leader Markus Söder also think along these lines.

Different strategies: cuddly course or clear edge?

How is German politics dealing with Trump in the first weeks of his second term in office, which are also the last weeks of the federal election campaign? Scholz has decided to give up. When Trump formulated territorial claims in Greenland, Panama and Canada a few days ago, the Chancellor was the first European head of government to publicly criticize it. It probably won’t be the last time in this election campaign.

The Union, on the other hand, prefers to hold back. The CDU foreign expert Jürgen Hardt will be at the inauguration on Monday in Washington. Chancellor candidate Friedrich Merz wrote Trump a handwritten letter for his swearing-in. The CDU chairman recently said that he “doesn’t look like a rabbit at a snake,” emphasizing that what matters is the vote in Europe. “No point-wagging will help, only coordination, collaboration and your own strategy will help.”