German Chancellor Merz told his annual summer press conference in Berlin on July
15 that government reforms are taking longer than expected and that U.S. tariff
policy, in addition to domestic factors, has hit early recovery momentum and
severely weakened recovery prospects. He said the decision to take on
substantial additional borrowing was prompted by changes in the diplomatic and
security environment—notably the situation in Ukraine and actions by some
partners toward Ukraine—which forced a recalibration of fiscal policy. Merz did
not name countries or leaders; his remarks have been widely interpreted as
referring to U.S. President Trump.
