Germany Adapts as US Tariffs, Troop Withdrawal Hit

Business confidence in Germany's auto sector fell 4.8 points to minus 23.8 in May from minus 19 in April, with the forward-looking expectations index nearly halving from minus 15.3 to minus 30.7, the Ifo Institute reported. The share of companies reporting shortages of key intermediate products jumped to 9.3 percent in April from 1 percent in March; the German Mineral Resources Agency flagged helium imports from Qatar — used in chip production, airbag manufacture, metal processing, and battery leak-testing — as the central supply risk. The deterioration coincides with President Donald Trump's announcement that tariffs on EU vehicle imports will rise this week from 15 to 25 percent. VDA president Hildegard Muller said the higher duties would impose significant costs on European automakers and ultimately raise prices for US consumers.

Defence Minister Boris Pistorius committed €1.35 billion ($1.6 billion) to upgrade Bremerhaven port as part of a programme to prepare military supply lines for a potential large-scale European conflict. The upgrade is meant to enable transport of heavy equipment such as Leopard tanks to potential front lines. Pistorius described the move as a "paradigm shift" and said peace and stability could no longer be taken for granted.

SPD deputy parliamentary leader Siemtje Möller called for deeper European defence cooperation following Trump's announcement that more than 5,000 US troops would withdraw from Germany and that a previously agreed Tomahawk missile deployment was suspended. Möller said Germany should urgently consult France and the UK in the E3 format to close the emerging deterrence gap; the Tomahawk deployment, agreed by former Chancellor Olaf Scholz and President Joe Biden in 2024, had been positioned as a pillar of European deterrence.

Rheinmetall chief executive Armin Papperger said Germany had surpassed the United States in conventional ammunition production, citing the company's expansion since Russia's 2022 invasion of Ukraine. Rheinmetall lifted artillery shell production from 70,000 to 1.1 million rounds per year and medium-calibre ammunition from 800,000 to 4 million rounds annually. Papperger's claim that Germany had overtaken the US has not been independently verified.