Overview

• Germany's main equity index plunged 10% on Monday following the announcement of U.S. tariffs by President Donald Trump, exacerbating market instability.
• Friedrich Merz emphasized the need to restore Germany's competitiveness, calling it a key priority in ongoing coalition negotiations with the SPD.
• The far-right Alternative for Germany (AfD) has surged in polls, drawing level with Merz’s CDU for the first time in the post-war era, raising political stakes.
• Merz faces internal criticism from CDU members, including youth wing leader Johannes Winkel, over potential compromises in coalition talks on issues like migration and fiscal policy.
• The coalition negotiations, already strained by economic and political pressures, aim to finalize an agreement this week, though delays threaten Merz’s earlier pledge of forming a government by Easter.