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Christian Democrat (CDU/CSU) Friedrich Merz sent a clear message to both Donald Trump and Germany's European partners on Wednesday, after reaching a government formation agreement with the Social Democratic Party (SPD).
Germany's incoming chancellor stressed that Europe can rely on his country and called for a joint response to Trump's tariffs.
The reaction comes at a time when the European Union voted in favor of imposing tariffs on several products imported from the US, more about this in our previous post.
He noted that Trump has caused new turmoil in financial markets, warning that "we don't know where this is going."
"Germany will fulfill its obligations regarding defense and Germany is ready to strengthen competitiveness," he added during an event at which he presented the priorities of the new coalition.
The election of the new chancellor by the Bundestag is expected in early May.
According to the programmatic agreement, the government will tighten immigration policy, implementing, among other things, a "repatriation offensive", the gradual removal of voluntary integration programs by states, the removal of "turbo naturalization" that allowed obtaining citizenship within three years, while it will also limit the family reunification program.
Refugees under limited protection will only be able to bring their family members to Germany two years after their arrival. Cash payments for refugees will also be phased out and they will only be provided with prepaid cards for purchasing specific items. The new government will also aim to halve the number of arrivals via the “Balkan route”, from 50,000 to 25,000 per year.
The future partners also agreed that no speed limits would be imposed on highways, abandoning the corresponding proposal by the Social Democrats.
In the economy, the corporate tax rate cut will be gradually reduced by one unit, starting in 2028.
The solidarity tax remains in force unchanged, while the electricity tax will be reduced to the "European minimum" level.
There will also be tax cuts for low- and middle-income earners, and the “citizens’ allowance” will be abolished, replaced by a “basic security for job seekers.” In the same vein, the unemployed must actively seek work or else lose their social benefits.
In foreign policy, for the first time it is directly stated that German diplomacy must serve German national and economic interests.
"Our development cooperation policy is guided by both values and interests.
"Democracy, the rule of law and human rights are consistent with the interests of our foreign policy, security policy and economic policy," the text of the agreement states.
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