Germany: Merz, GroKo & EU Leadership 2026

Germany's political landscape underwent a significant reset in early 2025. The "Ampel" (traffic-light) coalition of the SPD, Greens, and FDP — which had governed since 2021 under Chancellor Olaf Scholz — collapsed in November 2024 after irreconcilable disputes over the federal budget. Early elections in February 2025 saw the CDU/CSU win with 28.6%, the AfD place second at 20.8%, and the FDP fail to clear the 5% electoral threshold, losing all Bundestag representation. Friedrich Merz formed a CDU/CSU-SPD Grand Coalition (GroKo) in March 2025.

Merz has moved swiftly to reshape Germany's policy direction. On defense, Germany has dramatically increased military spending, committing to exceed the NATO 2% GDP target. On migration, Merz has tightened border controls and pushed for stricter EU-level asylum rules. On Ukraine, Germany under Merz has become the EU's most vocal advocate for continued military support. The AfD's emergence as the second-largest Bundestag party is the most dramatic shift in German party politics since reunification; all other parties maintain a strict "firewall" against cooperation with the AfD.

Germany contributes approximately 25% of the EU's annual budget, holds 96 seats in the European Parliament (the most of any member state), and its economy accounts for roughly 25% of total EU GDP. Ursula von der Leyen — a German CDU politician — is EU Commission President for her second term (2024-2029), ensuring close alignment between Berlin and Brussels. Under Merz, Germany has become the EU's most hawkish member on Russia and Ukraine, pushing for greater EU defense integration and a European military capacity less dependent on US leadership.

US-Germany relations entered a new phase with Donald Trump's return to the White House in January 2025 and Friedrich Merz's assumption of the chancellorship in March 2025. Trump has long been critical of Germany's trade surplus with the United States — Germany consistently exports far more to the US than it imports — and has threatened or imposed tariffs on German-made automobiles, steel, and aluminum. The German auto industry, which includes BMW, Mercedes-Benz, and Volkswagen production facilities on both sides of the Atlantic, is acutely sensitive to US trade policy.

Trump has also expressed public admiration for the AfD, particularly its leader Alice Weidel, and has criticized the German government's "firewall" against the AfD as undemocratic — a stance that has generated sharp diplomatic friction. Merz, for his part, has responded by accelerating the EU's push for strategic autonomy in defense and technology. Germany has been among the loudest EU voices arguing that Europe must reduce its dependency on US security guarantees given Trump's ambivalence about NATO Article 5 commitments. The bilateral relationship remains important on trade and intelligence-sharing, but political trust between the two governments is at a historically low point.