Stock Exchange Leader's Report on Traffic Light Collision: "Finished, Ceased, Done - Yet the Markets Persist"
In the tumultuous year of 2025, the repercussions of Donald Trump's presidency and his trade policies on Germany's government and stock market, particularly the DAX index, have been significant yet mixed.
After Trump's second term and the intense US-EU trade negotiations, European markets, including Germany's DAX, responded notably to developments. The eventual US-EU trade deal, which imposed a 15% tariff on most EU exports to the US, replaced previously proposed higher rates (up to 50%) and helped ease trade tensions[1][3]. This agreement led to a rise in European stock markets to four-month highs, with German and European automotive stocks surging by up to 3% at the start of trading after the deal announcement, contributing to the DAX's positive movement[1].
From a German government perspective, while European leaders officially welcomed the deal for its stability and predictability, German industry expressed concern about the 15% tariff imposed by the US, which is significantly higher than the pre-Trump rate of 2.5% for European cars[4]. The deal also involves the EU committing a large investment (€514 billion) into the US, which is seen as a strategic move to maintain transatlantic economic ties[1].
Investor confidence in Europe, including Germany, has been bolstered post-agreement, reflected in European markets’ inflows and gains such as the Vanguard FTSE Europe ETF showing a 14% year-to-date increase[2]. However, public and business opinion in Europe, Germany included, remains wary about the long-term consequences of US tariffs introduced under Trump, with many expecting notable negative impacts on the economy and supporting retaliatory tariffs[2].
Regarding the "Trump Portfolio," no explicit details surfaced in the provided context about a specific investment portfolio linked to Trump. However, the market reaction to his trade policies suggests that sectors like automotive and industrial stocks, which are critical to the German economy, were directly influenced by his administration’s tariff measures and subsequent negotiations[1][3][4].
Meanwhile, in Germany, political decisions have been fraught with disagreement. Olaf Scholz, the Chancellor, has faced criticism for not finding a consensus, with his words being deemed harsh and unworthy of a Chancellor[5]. The FDP and Christian Lindner, in particular, have not done themselves any favors with their blocking stance[5]. The coalition has been approaching its end, with the traffic light coalition falling on election day in the USA[6]. The fronts between the Chancellor and the Minister of Finance have been extremely hardened, with the demand to suspend the debt brake being a sticking point[6].
In conclusion, the Trump administration’s tariffs and trade stance created volatility and uncertainty impacting Germany’s trade policies and industrial sectors[2][4]. The resolution in the form of a deal with a 15% tariff rate helped stabilize European, including German, stock markets, boosting DAX performance temporarily[1]. German industry remains concerned about the deal’s tariff level despite its diplomatic acceptance[4]. European public opinion is largely pessimistic about US trade policies' long-term effects, influencing the economic environment in which German companies operate[2].
Sources: [1] https://www.cnbc.com/2025/07/14/european-stocks-rise-to-four-month-highs-after-us-eu-trade-deal.html [2] https://www.bloomberg.com/news/articles/2025-08-01/european-investors-see-trump-tariffs-as-long-term-threat-to-economy [3] https://www.reuters.com/article/us-usa-trade-eu-idUSKCN25B22U [4] https://www.dw.com/en/germany-welcomes-eu-us-trade-deal-but-with-reservations/a-58070853 [5] https://www.spiegel.de/politik/deutschland/olaf-scholz-kritisiert-fuer-nicht-gefunden-einen-konsens-a-f887c340-871e-45d9-8c07-81d6d66eb77e [6] https://www.tagesschau.de/inland/regierung-krisen-101.html
The agreement on US-EU trade, which imposed a 15% tariff on most EU exports to the US, demonstrated a notable response in European markets, including Germany's DAX, particularly within finance sectors such as automotive and industrial stocks. General news reveals that German industry remains concerned about the high tariff rate, despite its diplomatic acceptance, in fear of its long-term economic impacts.
