Germany’s finance minister has attributed a significant decline in the country’s anticipated tax revenues to Donald Trump’s “irresponsible war in Iran.” Lars Klingbeil stated that the US president’s actions in the region had triggered a “global energy shock.”
German officials have reduced the projected tax revenue for 2026-2030 by approximately €70 billion ($82 billion; £60.52 billion). Klingbeil remarked in Berlin that the downgrade “shows just how much the war in Iran is harming our economy.”
Diplomatic Fallout and Economic Concerns
Last month, German Chancellor Friedrich Merz angered Trump by suggesting that the White House had been “humiliated” by Iranian negotiators. These comments led the US president to threaten the withdrawal of thousands of US troops from bases in Germany.
Since taking office a year ago, Chancellor Merz has frequently indicated that Trump’s policies have altered the traditionally close relationship between the US and Europe. For instance, in February, Merz stated that “a deep divide has opened between Europe and the United States.” However, the German Chancellor has visited the White House twice within a year in an effort to alleviate tensions in trans-Atlantic ties.
Alongside other European countries, Germany has been critical of the war launched by the US and Israel against Iran on February 28, which has significantly heightened fears of a global economic downturn. Germany’s coalition government has been striving to boost an economy that has been stagnant for years, with high energy costs and weak demand for exports playing significant roles.
Last month, Merz informed students that “the Americans clearly have no strategy” and he could not discern “what strategic exit” they intended to choose. He added, “The Iranians are obviously very skilled at negotiating, or rather, very skillful at not negotiating, letting the Americans travel to Islamabad and then leave again without any result.” He further added that the “entire nation” was being “humiliated” by the Iranian leadership.
Trump responded the following day with a post on Truth Social, stating that Merz believed it was “OK for Iran to have a Nuclear Weapon” and “doesn’t know what he’s talking about.” The post concluded, “No wonder Germany is doing so poorly, both Economically, and otherwise!”
Extending the dispute, Trump later suggested Merz should concentrate more on “fixing his broken Country, especially Immigration and Energy, and less time interfering with those that are getting rid of the Iran Nuclear threat.”
Earlier this month, just days after Merz’s initial comments, the US Defense Department announced a plan to withdraw 5,000 troops from Germany – an order attributed to Defense Secretary Pete Hegseth. Germany’s defense minister stated that the Pentagon’s decision was “foreseeable.” The US military deployment in Germany is by far its largest in Europe, with approximately 12,000 troops in Italy and an additional 10,000 in the UK.
Trump is a longstanding critic of the NATO alliance and has criticized allies for not participating in his plans to reopen the strategic shipping route through the Strait of Hormuz, which has been effectively closed by Iran. Approximately 20% of the world’s oil and liquefied natural gas (LNG) typically passes through the Strait, and hostilities have caused global fuel prices to soar.
The warring sides are observing a ceasefire, intended to lead to a deal to end the war. On Wednesday, Trump stated that the war would be “over quickly.” Iran has indicated it is considering a US proposal to end the war. However, negotiations have stalled as the US has imposed a blockade on Iranian ports and is also attempting to open the Strait of Hormuz to allow nearly 2,000 ships stranded in the Gulf since February to pass through unharmed.
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