Germany's Centrist Parties Forge Coalition Amidst Trump-Induced Recession Fears

Germany's political landscape has shifted as major centrist parties successfully negotiated a coalition agreement. This development comes when Europe's largest economy is on the brink of recession, exacerbated by sweeping tariffs imposed by the Trump administration, which have caused global economic instability.

The Christian Democratic Union (CDU), along with its Bavarian partner, the CSU, emerged as frontrunners in February's federal election. They are set to present the coalition deal with the center-left Social Democratic Party of Germany (SPD) in Berlin. Friedrich Merz, the leader of the CDU and prospective chancellor, aims to revitalize Germany's economy after years of stagnation.

The CDU/CSU had been engaged in extensive coalition talks with the SPD, following the collapse of the previous three-way coalition government in November 2024. The urgency to form a stable government grew due to increasing uncertainty, particularly the impact of the Trump administration's import tariffs on global trade.

Merz has pledged to strengthen the country's defense capabilities in response to the increasing threats from Russia and the evolving security dynamics with the United States. Germany has reformed its "debt brake" policy to increase borrowing capacity and enable new investments in defense.

In addition, Merz has committed to tightening Germany's immigration policies. This pledge follows a series of incidents involving migrants, which made immigration a central issue in the 2025 election.