Is Friedrich Merz the Next Target in Trump’s Crosshairs?

After Friedrich Merz’s bold criticism of Donald Trump and his call for Europe to assert its independence from U.S. influence, many are wondering: is Merz the next target in Trump’s crosshairs? With Merz positioning Germany as a key player in Europe’s quest for greater autonomy, his remarks have strained the already fragile U.S.-Germany relationship. Known for his unapologetic approach to foreign relations, Trump is unlikely to ignore this challenge. In response, the U.S. could leverage its economic power, potentially targeting Germany’s key industries with tariffs or sanctions, sending a clear message that defying American influence comes with significant consequences.

The U.S.-Germany Economic Relationship: A Fragile Balance

The U.S. and Germany have long been major economic partners, with the United States serving as Germany’s largest trading partner outside the European Union. As of 2024, Germany’s exports to the U.S. were worth over €252.8 billion, accounting for 11% of its total exports. However, this close relationship could be severely impacted if U.S. President Donald Trump—or any future U.S. administration—decides to use economic leverage against Germany. Below, we explore specific examples of how Trump could strong-arm Germany, taking advantage of economic metrics, trade relations, and global geopolitical tensions.

Trade Tariffs and Sanctions: Targeting Germany’s Key Sectors

Trump has a history of using tariffs as a political tool to force trade partners into alignment with U.S. interests. If Trump were to impose tariffs on German products, it would hit key sectors of the German economy particularly hard.

Automotive Industry: Germany’s automotive industry is one of its economic cornerstones, with brands like Volkswagen, BMW, and Mercedes-Benz exporting a significant portion of their vehicles to the U.S. The U.S. has previously considered imposing tariffs on European-made cars, with tariffs as high as 25% discussed during the Trump administration. If such tariffs were reintroduced, it could cripple the German carmakers’ ability to compete in the U.S. market, which represents a major revenue stream for them. For example, German automakers like Volkswagen sold over 600,000 cars in the U.S. in 2022, and this number could drop drastically if tariffs were imposed.

Industrial Goods and Chemicals: Germany is also a global leader in industrial goods, chemicals, and machinery exports. The U.S. is one of the largest markets for these sectors. Targeted tariffs on these industries could result in job losses and economic contraction within Germany. For instance, chemical giants like BASF, a global leader in the chemical industry, generate a significant portion of their revenue from the U.S. market. Any tariff or trade barrier would likely harm their competitive position and profits.

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Currency Manipulation and Exchange Rate Pressures

The U.S. wields considerable power over global financial systems, and one method of exerting pressure could be through currency manipulation, particularly influencing the euro-dollar exchange rate.

Impact of a Stronger Dollar: If Trump decided to manipulate currency markets to strengthen the dollar, it would directly affect the competitiveness of German exports. A stronger dollar would make German goods more expensive for American consumers, reducing demand for German products. The euro-dollar exchange rate is pivotal for Germany’s export-driven economy, and such actions could lead to lower sales, particularly in sectors like consumer goods and automobiles.

For example, Germany exported over €90 billion worth of vehicles to the U.S. in 2023, and any significant rise in the dollar could reduce the competitiveness of these products. (reuters.com)

Financial Sanctions and Restrictions on U.S. Investments in Germany

The U.S. government has imposed financial sanctions on foreign companies and individuals in the past, and it could use similar methods to target German companies or individuals it deems politically inconvenient. Through restrictions on access to U.S. financial markets, the U.S. could disrupt Germany’s business operations.

Impact on Key Sectors: Germany’s financial sector, particularly banks like Deutsche Bank and Commerzbank, relies heavily on U.S. financial markets. A restriction on these institutions’ ability to engage with U.S. capital markets could lead to severe liquidity shortages. Additionally, U.S. pension funds and investment firms are significant investors in German companies, and any sanctions or restrictions on these investments could lead to capital outflows and a decline in foreign direct investment (FDI).

For instance, in 2023, U.S. investment in Germany amounted to over $400 billion, with sectors like technology, finance, and manufacturing receiving the largest share. Any disruption in this flow of capital could result in slower economic growth for Germany and a reduction in job creation.

Supply Chain Disruptions and Increased Costs

Germany’s manufacturing sector is highly integrated into global supply chains, with the U.S. serving as a major supplier of raw materials and high-tech components. A trade war, supply chain disruption, or economic sanctions could increase costs for German manufacturers, making them less competitive in global markets.

Germany’s manufacturing sector is heavily reliant on U.S. imports, including key technology components like semiconductors, machinery parts, and raw materials for its automotive industry. If Trump were to restrict exports of these materials, German companies could face delays and higher production costs. Companies like Siemens and Bosch rely on U.S. technology and industrial products to maintain their operations.

Additionally, if Trump targeted German companies with sanctions—similar to previous actions taken against Chinese firms—it could lead to significant disruptions in critical supply chains. The automotive industry, in particular, would suffer, as many of the key parts for German cars are sourced from the U.S.

U.S. Military Presence and Geopolitical Leverage

Trump could also use geopolitical leverage to apply pressure on Germany, particularly through NATO and the U.S. military presence in Germany. Although Germany is a NATO member, Trump has previously threatened to withdraw U.S. military forces from European bases unless NATO countries increase their defense spending.

Defense Spending Pressure: Germany has long been under pressure to meet NATO’s defense spending target of 2% of GDP. As of 2023, Germany’s defense spending was around 1.5% of GDP. Trump could use this as leverage to pressure Germany into complying with U.S.-favored defense policies, potentially involving greater military alignment with U.S. interests in Europe and the Middle East.

Moreover, a reduction in the U.S. military presence in Germany would force the country to spend more on its own defense, which would further strain the federal budget. This could lead to cuts in social welfare programs, which may provoke domestic unrest and further weaken the economy.

Public Diplomacy and Global Isolation

Trump could also engage in public diplomacy to discredit Germany’s policies on the global stage. By aligning himself with right-wing populist movements in Europe, Trump could undermine Germany’s standing within the EU, making it more difficult for Germany to secure favorable trade deals or build international coalitions.

Impact on Germany’s Global Standing: If Trump were to publicly criticize German policies on immigration, the environment, or trade, it could strain Germany’s relationships with other global powers, particularly within the EU. This could isolate Germany diplomatically, leaving it with fewer allies in trade negotiations, security matters, and geopolitical influence.

Moreover, a discredited Germany would face challenges in global trade, as international partners may seek alternative markets and alliances that are not so publicly aligned with controversial U.S. policies.

The High Stakes for Germany

If Trump or any future U.S. president sought to economically strong-arm Germany, the results could be devastating for its economy. The impact would be felt most acutely in key sectors like automotive, manufacturing, and technology, as well as in the broader economy through reduced investment, trade barriers, and supply chain disruptions.

Germany’s economic resilience, however, lies in its ability to adapt, diversify trade relationships, and reduce reliance on external factors that could trigger such economic leverage. The growing calls for European autonomy, as seen in leaders like Friedrich Merz, indicate that Germany may begin to pivot away from its traditional reliance on the U.S., seeking greater self-sufficiency in its economic and political dealings.

Ultimately, Trump’s economic tactics could shape Germany’s strategic direction, but whether Germany would buckle under pressure or chart a new, more independent course will depend on its ability to forge new global alliances and strengthen its domestic economic policies.