Background: Severe drought has caused record-low water levels on the Rhine and Danube, disrupting shipping and threatening German industry, with cargo vessels operating at reduced capacity and a rail line closure compounding the crisis. Today: The German inland shipping association (BDB) warns that the Rhine could become impassable at the critical Kaub gauge between Koblenz and Mainz within the week, with a single-digit water level forecast, effectively splitting the waterway into two separate regions. BDB managing director Jens Schwanen stated that commercial shipping would be unable to transport goods in the region, impacting connections between North Sea ports and southern Europe via the Main-Danube Canal. Crisis meetings with the federal transport ministry are planned for Monday to discuss increased use of road and rail. Several states, including North Rhine-Westphalia, Rhineland-Palatinate, Lower Saxony, and Saarland, have already relaxed Sunday driving bans for trucks carrying goods that cannot be shipped due to low water levels.

Hamburg's First Mayor Peter Tschentscher (SPD) sharply criticized the federal government's tax policy, calling it a course that leads Germany into a dead end. He opposed the planned reduction of corporate tax from 15% to 10% by 2032, warning of severe strain on municipal budgets. Tschentscher advocated for redirecting those funds to statutory health insurance and called for a digital tax on large tech corporations, citing examples from France, Austria, and Italy. He also criticized the high-debt 2027 federal budget and warned that municipal budgets are on the verge of collapse.

Background: German Chancellor Friedrich Merz has signaled openness to EU proposals for tougher trade measures against China, citing unfair trade practices and industrial overcapacity, as Germany's trade deficit with China reached €90 billion. Today, new data from Germany Trade & Invest (GTAI) shows Germany's trade deficit with China widened to about €55 billion in the first half of 2026, up from €40 billion in the same period last year. German exports to China fell over 12% year-on-year to just under €37 billion, making China only the ninth-biggest export market for German goods, down from second place in 2021. Imports from China rose 8.9% to €91.8 billion. The decline is attributed to China's weak domestic economy, increased focus on domestic value chains, and German firms producing more inside China. Smaller economies like Austria and Switzerland now buy more German goods than China. German exports to the U.S. also fell about 6% to just over €74 billion, while imports from the U.S. grew 7.1% to nearly €51 billion. Overall German exports rose 3.7% to €817 billion in the first half. The shift highlights Germany's manufacturing struggles with U.S. tariffs and Chinese competition, prompting calls for the 'Made in Germany' brand to reinvent itself.

Rheinmetall CEO Armin Papperger has publicly stated he will not be intimidated despite facing alleged Russian murder plots, arson, and protests at his home. He is under police protection comparable to that of Chancellor Friedrich Merz. His comments come as German intelligence warns of increased Russian espionage and sabotage targeting defense contractors supplying Ukraine. Papperger emphasized that "chickening out" is not an option and that he remains committed to his role, with a contract running for another three and a half years.

Background: Record low Danube water levels have caused an energy crisis in Central and Southeastern Europe, with Hungary's Paks nuclear plant at minimal capacity and Romania's Cernavoda reactor shut down. Today: A new report emphasizes that heatwaves and droughts across Europe are stressing energy infrastructure beyond nuclear, including wind, biomass, and hydroelectric power. Nuclear plants in France and Hungary have reduced output due to low river water levels, and wind and biomass generation have also been affected. The article argues that relying on a return to normal conditions is futile and calls for investment in reliable energy sources, large-scale battery storage, green hydrogen, and faster grid expansion to ensure stability amid accelerating climate change.

The SPD parliamentary group has criticized Germany's suspension of family reunification for subsidiary protection holders as too strict, noting that only seven hardship visas have been granted out of thousands of applications since the suspension began in July 2025. The party's migration spokesperson Rasha Nasr called the separation time limits for children and parents 'unreasonable' and demanded that the regulation not be extended beyond its two-year term. The suspension, agreed upon by the CDU/CSU and SPD coalition, affects mainly Syrian war refugees.

Germany's Finance Minister Klingbeil announced a new 'Customs Financial Justice Act' that would give customs authorities new powers to temporarily seize assets of unclear origin, such as luxury cars and watches, from suspects who cannot prove they were legally acquired. The law, to be passed by the cabinet, is part of a broader reform ('Customs 2030') to combat money laundering and financial crime. The head of the Customs Criminal Investigation Office said the measure targets organized crime and assets above 100,000 euros. Critics, including Green politician Katharina Beck, argue the law does not adequately address tax fraud.

Moritz Schularick, president of the Kiel Institute for the World Economy (IfW), has publicly criticized German Defense Minister Boris Pistorius for allocating a significant portion of the €700 billion Bundeswehr modernization fund to outdated systems like tanks and frigates instead of future-oriented technologies such as AI, robotics, drones, and satellite systems. Schularick argues that the program risks failing its objectives and calls for a central procurement coordinator in the Chancellery and a shift toward building production capacities rather than ordering individual weapons systems. This critique highlights ongoing debates about Germany's defense strategy and military readiness amid evolving security challenges.