By Brian Swint

Germany's next chancellor wasted no time in calling out President Donald Trump.

The conservative Christian Democratic Union', led by Friedrich Merz, comfortably finished with the most seats in the Bundestag. In remarks Sunday, Merz said that his priority is to "strengthen Europe as fast as possible so that we gradually achieve independence from the U.S." He added that "It's clear that Americans, or at least this American administration, are largely indifferent to the fate of Europe."

The remarks highlight how quickly Trump has alienated allies in Europe. While the president has called on Europe to carry more of the burden of its own defense, he has also sidelined European leaders in talks with Russian President Vladimir Putin about ending the war in Ukraine. That laid down the gauntlet for Merz and others to be more confrontational with Trump in the future.

It's a positive for Merz that it looks like he'll be able to govern with just one coalition partner -- the center-left Social Democratic Party won enough seats to be able to form a two-party governing coalition. If he had needed help from more blocs, it would have made it harder to agree on a unified stance.

One of Merz's first challenges will be dealing with Trump's plans to impose tariffs on imports. While many of Germany's famous car makers, such as Volkswagen and BMW, already produce a lot of vehicles in the States, which would get around tariffs, exports are still key. Companies in the blue-chip DAX index make about 24% of their sales in the U.S., according to Deutsche Bank.

Raising defense spending and bolstering economic growth will also be at the top of the agenda.

The vote finished largely as opinion polls suggested it would -- the lack of surprises in itself is reassuring to traders. But one ominous sign for Merz was the success of the far-right Alternative for Germany, or AfD, which was publicly supported by Elon Musk, who has been working closely with Trump.

The AfD came in second place. In one sense, that doesn't matter because all other parties have said they won't work with it. But the party's share of the vote share doubled since the last election, suggesting their popularity is still on the rise.

Write to Brian Swint at brian.swint@barrons.com

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February 24, 2025 09:05 ET (14:05 GMT)

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