Germany's coalition government collapsed in November 2024 over internal disputes about the budget and economic policy. The country is now preparing for snap elections in early 2025. The results could be influenced by the poor state of the economy, the war in Ukraine and Donald Trump's second presidency in the USA.

"Germany and Europe must urgently strengthen their competitiveness and defence capabilities," the German government, businesses and NGOs alike hastened to declare in response to Donald Trump's victory in the US presidential election. The Federation of German Industries (BDI) warned that the tone of negotiations in transatlantic relations would become harsher, and economists predicted that Germany's already weak, export-oriented economy would take another blow, given Trump's plans to introduce sweeping tariffs.

"The results of the US election require Germany and Europe to reorient their plans and efforts in order to become more self-reliant, strengthen their competitiveness and advance international climate action," said German politicians, business leaders and NGOs. Donald Trump's electoral triumph also prompted calls for unity in society and in government.

Chancellor Olaf Scholz stated that Europe must now "stand together and act as a single entity". In recent years European countries had taken on greater responsibility "for the security of our continent, for support to Ukraine, for Europe's independence in economic and energy matters", the Chancellor noted. Following the outcome of the US election, which many European capitals had feared, the Chancellor called for close transatlantic cooperation to continue under the re-elected Republican president Donald Trump, from which both sides would benefit. "We are better off together," Scholz stressed.

Given the divisive pre-election campaign in the USA, Chancellor Scholz said he wanted German society to remain united despite differing political views.

In the preceding weeks, Germany's coalition government had clearly displayed its discord and was approaching breaking point. With tensions rising over Germany's 2025 budget and general disagreements about economic, financial and climate policy, the country faces economic stagnation and difficult prospects for industry. Chancellor Scholz's Social Democrats (SPD), the Green Party and the Free Democrats (FDP) failed to reach agreement, and snap elections will be held in Germany. The next scheduled elections had been due in the autumn of 2025. Government members and political observers have warned that Germany must avoid "high-risk games" between the coalition parties at a time when a change of government in the USA could cause upheaval in global geopolitics.

Economists predicted that Germany's already weak economy would take another blow, given its dependence on exports. Germany relies heavily on open international markets for its products. President Trump's plans to introduce sweeping tariffs in Germany's most important export market outside Europe pose a serious challenge to the German business model.

The head of the German Economic Institute (IW), Michael Hüther, stressed that German companies "can already start preparing for a costly trade war". Hüther urged the coalition government to stop focusing solely on itself. "In the coming years, Germany must learn more than ever before to stand on its own feet – both in geopolitics and in economic policy."

Germany's most important industry association called the US election results a "wake-up call for Germany and Europe", which must now strengthen their competitiveness and defence capabilities more quickly. The lobby group warned of "epochal changes" in transatlantic relations, in which "the tone will become harsher".

The policy director of the NGO Germanwatch, Christoph Bals, warned that Trump would most likely withdraw from the Paris Climate Agreement. The US president has the power to "slow down and obstruct" the transition to a climate-friendly global economy. "It is all the more important that the international community demonstrates at the UN climate summit in Baku and the G20 summit in Rio that it is capable of acting on climate protection without the USA, should that prove necessary," Bals said. He called on the German government to "take the initiative in building a broad coalition of countries that would, in the coming days, reaffirm their support for the Paris Climate Agreement and its goals".

A few notable quotes – politicians, economists and NGO representatives:

Chancellor Olaf Scholz (SPD):

"Germany and the USA have long worked together successfully to promote prosperity and freedom on both sides of the Atlantic. We will continue to do so for the good of our citizens."

Finance Minister Christian Lindner (FDP):

"In the European Union, in NATO and in Berlin too, the economic and security policy homework must be done more urgently than ever before."

Economy and Climate Minister Robert Habeck (Alliance 90/The Greens):

"Everyone should understand that we gain more when we work together and lose when we act separately. Even before the US election results, it was clear that Europe would bear greater responsibility in the world – particularly in the field of security policy. Europe must be united and act as a strong player in international politics. Germany must be a reliable and capable partner in Europe and must serve Europe's good and interests. Everything we do, we must do as Europeans. This applies in particular to our unwavering support for Ukraine. Its freedom too is essential to security and peace in Germany and in Europe. The time for national responsibility has now come. In this situation, Germany must be fully capable of acting."

Federation of German Industries (BDI):

"...the unambiguous result of the vote in the USA is a 'wake-up call for Germany and Europe', which must strengthen their competitiveness and defence capabilities all the more quickly." BDI President Siegfried Russwurm warned of "epochal changes" in transatlantic relations, in which "the tone will become harsher and a protectionist course will be pursued consistently". Russwurm noted that in the first half of 2024 the USA was Germany's most important trading partner. For the ninth year in a row, it is the largest buyer of German products. At the top of the list are pharmaceutical products, machinery and cars. He added that Donald Trump's plans for numerous new tariffs – as announced during the election campaign – are causing concern among German industry representatives. The EU must show openness to compromise with the incoming US administration in order to prevent retaliatory tariffs from being imposed. "There is great potential for deeper cooperation, for example on regulatory matters and technical standards or the resilience of supply chains," Russwurm said.

The head of the German Economic Institute (IW), Michael Hüther:

"With Donald Trump's election, the German economy faces the next crisis in this run of setbacks. Companies can already start preparing for a costly trade war. One can only hope that the German federal government really is better prepared for these election results than it was in 2016. In any case, the so-called traffic-light coalition no longer has time to keep focusing on itself. In the coming years, Germany must learn more than ever to stand on its own feet – both in geopolitics and in economic policy."

Achim Wambach, head of the Centre for European Economic Research (ZEW):

"Acceptance of climate policy in Europe is at risk if it becomes clear that Europe's climate efforts will be tied to job losses. Especially if, at the same time, strong economic growth continues in the USA and emissions there do not fall, or fall only slightly. Europe and Germany must ensure that their climate efforts are implemented as efficiently and favourably as possible, promote green growth and at the same time avoid social upheaval."

Claudia Kemfert, energy economist at the German Institute for Economic Research (DIW):

"Trump is a 'catastrophe' for international climate policy. US President Donald Trump will withdraw from the Paris Climate Agreement, as he already did in 2019. This time he might also withdraw from the UN Framework Convention on Climate Change (UNFCCC), which would mean that the USA would take no part in global climate negotiations for an indefinite period and would no longer be a significant donor to the UNFCCC. A complete abolition of green economy subsidies is fairly unlikely, even though Trump has a majority in the House of Representatives and the Senate. Many Republican states in the USA benefit from the subsidies."

Moritz Schularick, head of the Kiel Institute for the World Economy (IfW):

"Donald Trump's election victory marks the beginning of the most difficult economic period in the history of the Federal Republic of Germany, because in addition to our internal structural crisis we face very serious foreign trade and security policy problems for which we are not prepared [...] Germany's democratic parties should unite and exempt defence investment from the debt brake, so that Germany and Europe are able to act geopolitically."

Sascha Müller-Kraenner, Executive Director of Environmental Action Germany (DUH):

"Right now we – in Germany and in Europe – must quickly draw the right conclusions. To me that means extensive investment in security and the economy, accelerating the transition to climate neutrality and energy independence. In future, too, we must not be dependent on shale gas extracted in the USA. Today's priority is a viable and sovereign Europe."