After Trump Delayed Tariffs, Germany's Chancellor-Designate Promptly Responded: The EU's United Action Succeeded!

On Wednesday, Germany's conservative party and the center-left Social Democratic Party reached a coalition agreement, marking the finalization of the formation of Germany's new government, which is expected to officially take office in May.

This comes at a time when the US has sparked a global tariff war, but US President Trump recently announced a 90-day tariff suspension for certain countries, which was seen as a significant positive signal by the market. On Wednesday, US stocks surged across the board, with the Nasdaq rising by 12% in a single day, and this sentiment also drove a widespread sharp increase in the Asia-Pacific market during Thursday's early trading.

On April 9, the US imposed a 10% baseline tariff on major trading partners and varying degrees of reciprocal tariffs, and around this time, economies such as China and the EU took countermeasures against US trade bullying.

Following Trump's "backdown" statement, Friedrich Merz, the conservative leader and Germany's incoming chancellor, addressed the White House in English, stating that a key message to Trump is that Germany is getting back on track.

He emphasized that the EU needs to unite in response to the escalating global tariff war, and Trump's announcement of a tariff suspension proves that unity is effective, serving as a successful example of Europe's unified trade policy approach.

New Atmosphere

Germany's new government faces significant trade challenges upon taking office, and Merz needs to lead the government in cooperating with the EU to jointly address US tariff threats.

Merz stated on Wednesday that the German coalition government will be a strong government capable of taking action, increasing defense spending, and enhancing Germany's economic competitiveness. Merz is clearly signaling the determination of the new German government to reassert EU leadership and strengthen international influence.

He also emphasized that the EU hopes to reach a zero-tariff agreement with the US, which would resolve trade disputes. Merz also mentioned that he will meet with Trump soon.

Germany's new ruling coalition also outlined its governance plan: agreeing to reduce taxes for low- and middle-income groups, lower corporate taxes, reduce energy prices, support the EV industry, and repeal a controversial supply chain law.

The coalition will also establish a committee to further reform the "debt brake" stipulated by the German constitution, a rule that critics have long argued limits Germany's fiscal freedom and hinders market vitality.

Joerg Kraemer, chief economist at Commerzbank, stated that the new coalition's policies are moving in the right direction, but given years of declining competitiveness, Germany's economic policy has not truly been reset.