US Concerns Over AfD’s Economic Approach Amid Berlin Tensions

The German economic press was recently preoccupied with the election of the center-right party (CDU) leader to the chancellery on May 6. The primary concern is how Germany will address its defense spending amidst US military withdrawal threats from Europe under Trump’s presidency. This issue led to the dissolution of the previous coalition government, resulting in early elections that brought CDU’s Merz to power. To fund increased defense spending, the constitutional debt brake was effectively suspended through parliamentary maneuvers. However, the far-right AfD, supported by Elon Musk and aligned with Trump, opposed this move and challenged it in court, labeling it a ‘financial coup.’ Despite their appeal being dismissed, AfD faces potential prohibition as German intelligence upgraded them to a ‘confirmed far-right extremist organization.’ This classification has drawn criticism from US officials like Foreign Minister Marco Rubio, who views it as ‘covert tyranny.’ Tensions persist as AfD leads in polls, complicating relations between Germany and the US. Meanwhile, internal factions within CDU-CSU lean towards stronger ties with American Republicans, while Chancellor Merz maintains cautious engagement. His recent stance in Brussels highlights a selective approach: advocating for unified EU trade policies but opposing shared debt issuance, signaling a pragmatic yet self-serving strategy. Analysts predict practical implementation challenges by late 2026, just before the electoral cycle begins in 2029, with AfD gaining momentum.