Merz Battles Political Crisis as AfD Surges and Markets Crash

Friedrich Merz, Germany’s chancellor-in-waiting, is scrambling to regain control of the political narrative amid a tumultuous weekend that has seen his conservative bloc falter in polls, financial markets reel from U.S. tariffs, and coalition talks teeter on the brink. Addressing reporters on Monday, Merz emphasized a renewed focus on economic competitiveness, a move aimed at calming jittery party members and voters as Germany’s main equity index plummeted 10% at the opening bell.

A Sunday poll presented a significant challenge when it revealed the Alternative für Deutschland (AfD) maintained equivalent support levels with the Christian Democratic Union (CDU) led by Merz at 30%, marking a post-war first for a far-right political party in Germany. The electoral victory of Merz in February resulted in his CDU/CSU bloc achieving 28.5% of the vote yet his party now encounters rising opposition from the AfD’s immigration-focused ideology. Global markets experienced chaos when U.S. President Donald Trump enforced broad tariff policies that endangered Germany's export economy along with increasing demands for government formation.

Merz, who campaigned on fiscal discipline, now finds himself at odds with allies and coalition partners. His prospective Social Democrat (SPD) partners, polling at 16%, are pushing for concessions that clash with his promises of tax cuts and reduced bureaucracy. Criticism has also erupted within his own ranks, with the CDU youth wing leader Johannes Winkel warning that Merz’s credibility hinges on delivering on key issues like migration and economic reform. “We can’t carry on as before,” Winkel told Sueddeutsche Zeitung, signaling potential rebellion if coalition talks falter.

With coalition negotiations entering a critical week, Merz urged urgency, “The situation on the international equity and bond markets is dramatic and threatens to get worse.” The negotiation between Merkel and the SPD is scheduled to conclude before the end of the week through the utilization of a 500-billion-euro infrastructure fund for defense and economic growth. As Trump's trade restrictions rise while the AfD political movement expands Merz faces considerable challenges in securing the party leadership position because it tests his ability to bring together a divided political landscape and lead Germany during mounting international tensions.