Tue May 13 13:25:35 UTC 2025: Okay, here’s a summary of the text and a news article rewritten from it:

**Summary:**

Following a surprisingly difficult initial vote, Friedrich Merz has become the new German Chancellor, leading a coalition of the CDU/CSU and the SPD. His primary challenge is to revive the struggling German economy, which is facing headwinds from U.S. tariffs imposed by President Trump. While Trump has offered a temporary pause on some tariffs, significant duties remain, particularly on the auto industry. These tariffs, coupled with potential retaliatory measures from the EU, could significantly harm Germany’s GDP. Experts suggest Germany and the EU should focus on de-escalation, seeking agreements with the U.S., expanding trade with other partners like India, and boosting internal competitiveness through tax and regulatory reforms. The situation is further complicated by the rise of the AfD and the potential for China to dump goods into the European market.

**News Article:**

**German Economy Faces Uncertain Future Under New Chancellor Amid Trade Tensions**

**BERLIN -** Friedrich Merz has taken office as the new German Chancellor after a nail-biting election in the Bundestag. While his election promises include tackling migration, the immediate focus has shifted to the ailing German economy, which is grappling with the impact of U.S. trade policies.

Merz’s election was not without its drama, with the Bundestag vote requiring a second round after he initially failed to secure enough votes. This unprecedented situation highlights the divisions within the German political landscape, as well as the scale of his challenge in tackling the country’s economic woes.

“We are undergoing a profound structural change, but for me the overriding message is that Germany must remain a country of manufacturing industry,” Merz declared in a national address following his swearing-in. He pledged to improve the conditions for economic growth to restore Germany’s position as an industrial leader.

The German economy has experienced negative growth for two consecutive years, a situation exacerbated by U.S. President Donald Trump’s tariffs on EU goods. Despite a 90-day pause on some tariffs, significant duties remain, particularly on the automotive sector, a key export for Germany.

The 25% tariff on cars and car parts is projected to add an average of $6,000 to the cost of each imported car, severely impacting the German automotive industry. Economists at the German Institute for Economic Research (DIW) and the Kiel Institute for the World Economy warn that a full-blown trade war between the EU and the U.S. could slash EU exports to the U.S. by half, potentially leading to a 0.3% contraction in German GDP.

Experts say that Germany needs to boost its productivity and innovation in order to remain relevant on a global stage.

“The key message to Donald Trump is that Germany is back on track. Germany will fulfill its defence obligations, and it is willing to strengthen its competitiveness. Germany will be a very strong partner within the European Union,” Merz had said soon after his party won the German elections in February.

The EU is considering several responses, including increasing imports from the U.S. and launching a dispute with the World Trade Organisation (WTO). A longer-term strategy involves deepening trade relations with other partners, such as Canada, Mexico, Japan, and South Korea, as well as exploring opportunities for sectoral agreements with India.

However, Germany and Europe must be aware that Trump has now turned to China as another potential target for trade sanctions.

Chancellor Merz faces the additional challenge of navigating a complex domestic political environment, including a strong presence of the far-right Alternative for Germany (AfD) in the Bundestag. The AfD’s presence could create disruptions to new economic reforms and may continue to destabilize the government.

Economists also note the need for internal reforms, including lowering corporate taxes and reducing bureaucracy, to attract investment and boost competitiveness.

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