German Business Hopes US Midterms Bring Steadier Trade Policy as Auto Confidence Rebounds

On Wednesday, November 4, 2026, Helena Melnikov, chief executive of the German Chamber of Commerce and Industry (DIHK), went on ARD television with a short request for Washington: "No more zigzagging." Republicans had just lost control of both chambers of Congress, and Germany's main business lobby was hoping the result would bring steadier trade relations with its largest export market.

Melnikov said the repeated tariff announcements, reversals and shifted implementation deadlines under President Donald Trump have made planning harder for German exporters. Reliability in the American market, she said, is extremely important. She declined to predict what Trump will do next economically, and urged Germany to widen its trading partnerships beyond the US and to carry out the domestic economic reforms it has promised.

Economists were more guarded. Achim Wambach, president of the ZEW economic research institute, warned that a president who loses his congressional majorities might lean harder on trade and foreign policy, where he keeps extensive powers. He said uncertainty about the direction of US trade policy remains high and pointed to a possible deadlock over the US budget. Even Democratic control, he added, would probably not bring a fundamental return to free trade, given broad bipartisan agreement on protecting US industry and on trade policy toward China.

There was some good news for the car industry. The Munich-based Ifo institute reported that confidence among German automakers has reached its highest level since mid-2024. Its business climate index rose from minus 33.2 to minus 4.1 points. Companies' assessment of their current situation turned positive for the first time since mid-2024, and expectations improved, though they remain negative overall. The survey was conducted in October, so it does not capture the midterm results.

Ifo's Anita Wolfl cautioned against reading too much into the jump. "There can be no talk of an all-clear," she said, citing sharp month-to-month swings as evidence of real uncertainty. A Franco-German agreement on a joint automotive strategy may have helped lift sentiment, she said, but only as temporary relief that leaves untouched the industry's central challenge of catching up with technology leaders. BMW illustrated the pressure, reporting a nearly 15% drop in quarterly net profit as weaker China sales outweighed gains in Europe and the US. Separately, Hildegard Müller, president of the VDA auto association, objected to an EU plan to tighten the utility factor for plug-in hybrids from November 29, with wider application from 2027. She said it puts around 50,000 German jobs at risk.

The day's news was darker in Berlin. Prosecutors said Hubert Aiwanger, 55, Bavaria's deputy premier, economy minister and chairman of the Free Voters party, was found dead in a hotel in the capital. The circumstances are unclear. Investigators said on Wednesday evening that they aim to determine the specific cause of death and rule out any possible foul play.

Elsewhere, domestic disputes continued. The Cabinet decided to halve the Western Balkans work quota from 50,000 to 25,000 people a year starting January 1, 2027, so that unemployed people already in Germany get priority for vacancies. It needs Bundesrat approval, and business associations have warned of worker losses. Vonovia chief Luka Mucic called Berlin's prospective coalition plan to take over portfolios held by companies with more than 10,000 apartments "simply the wrong approach." The plan envisages compensation of no more than €16 billion for 160,000 homes. Finance Minister Lars Klingbeil also rejected it and promised an investment protection law.

The Bundesrat vote on the quota and the fight over Berlin's housing plan are the next things to watch, along with the investigation into Aiwanger's death.