Germany’s likely next chancellor wants to reboot ties with France, do a free-trade deal with Donald Trump and get tougher on China and Russia.
Friedrich Merz was prematurely introduced as Germany’s chancellor at the Munich Security Conference last weekend — and proceeded to talk like he was already Europe’s economic leader.
The 69-year-old Christian Democrat won’t have long to wait: He is the favorite to win Sunday’s early general election, according to opinion polls that put support for his center-right party at around 30 percent. That should be enough to form a majority with one or two other parties from the political center.
“I fully agree with all those who are demanding more leadership from Germany and frankly I’m willing to do that because I’m seeing that Germany is in a strategic position in the center of Europe,” Merz told the security forum.
The former business executive spent years in the political wilderness during Angela Merkel’s rule, before capturing the Christian Democratic Union leadership in 2021 at the third attempt. On the campaign trail he has broadcast strong views on the economy and trade — calling to revive the Franco-German relationship at the heart of the European Union, for the bloc to recommit to free trade and to safeguard transatlantic relations.
It won’t be hard to improve on the lackluster leadership of Olaf Scholz, the Social Democrat chancellor who has presided over more than two years of economic stagnation and is almost certainly headed for the political exit.
But with American President Donald Trump apparently intent on launching a trade war of unprecedented aggression, and President Emmanuel Macron and the entire French political class retreating into their protectionist shell, is Merz’s resort to the free-trade formula that has so long served Exportweltmeister Germany timely or even relevant?
Here’s where Merz stands on the issues:
Transatlantic trade should be free
Merz, a convinced Atlanticist, sees Germany’s status as Europe’s largest economy as an opportunity to “not be a dwarf” versus an “unpredictable” Trump.
He says he hasn’t given up hope of reviving talks on an EU-U.S. trade deal — nearly a decade after they fell apart. With Trump on the trade warpath that looks a mighty stretch, however — although experience of the U.S. president’s first term might suggest that he is staking out maximum positions with an eventual “deal” in mind.
“Merz is rare in Germany for presenting Trump’s re-election as a justification for transatlantic engagement,” wrote Jeremy Cliffe and Jana Puglierin in a think piece for the European Council on Foreign Relations.
Cliffe and Puglierin added one rider: “He recognises that the transatlantic relationship must change radically to survive, with a more balanced burden of responsibility.”
Even if Trump is willing to parley, Merz would need to win over Paris to the cause — and that looks an impossibly tall order at a time when France is digging its heels in over ratifying a long-awaited free-trade agreement finalized in December with Mercosur, a South American bloc that groups Argentina, Brazil, Paraguay and Uruguay.
“We have to overcome our dispute on Mercosur,” Merz told the World Economic Forum in Davos last month, saying he was in regular close contact with Macron.
No kowtow to China
Merz has taken a less pliant line on China than Scholz, whose Social Democratic Party, or SPD, has close ties to Volkswagen. The country’s biggest automaker has fallen off the pace in China, its largest market, and faces a moment of truth as its local competitors take a commanding lead in electric vehicles both there and on the world market.
Merz has served notice that no German carmaker is too big to fail and ruled out any possible bailouts.
“Under no circumstances should you come to the state … to help you economically in such a situation,” he said in a keynote economic policy speech. “That is out of the question.”
Scholz — fearful of retaliation from Beijing — opposed duties on Chinese electric vehicles imposed after an investigation found evidence of unfair state subsidies. But Berlin was outvoted by other EU members and the duties entered into force last October.
No matter who sits in the chancellor’s office, Berlin will always remain critical of a European Commission that wants to extend its trade defenses to cover issues like screening outbound investments or imposing duties on Chinese companies.
Merz has admitted Germany has an unhealthy dependence on China, unlike Scholz. Teaming up in a coalition with the Greens, who are also hawkish on China, would allow Merz to pull back. With the SPD in his passenger seat, that would be less likely.
Foot-dragging on Russia
Other European governments worry that even a Merz-led Germany will continue to frustrate the adoption and enforcement of sanctions against Russia.
One senior EU diplomat — on the political level — recently confided in POLITICO that “the biggest problem still is Germany.”
“It’s still German national due diligence systems that are not in place. And I have no idea what the [reason for this] is,” this diplomat said. They added that the election and expected change in government might not bring relief for countries pushing to support Ukraine more.
Merz is clearly more hawkish on Russia than Scholz, who has campaigned as a Friedenskanzler (peace chancellor) and often created the impression that he merely wants Ukraine to avoid defeat, but not necessarily win, the three-year-old war. Scholz, under pressure from German business groups, last year blocked a rule that would bar EU-owned companies registered abroad from exporting to Russia.
With German exports groaning under high energy costs and chafing at the loss of the Russian export market, Merz’s pro-business party can also be expected to exert a net drag on attempts to extend sanctions or toughen their enforcement.
