US to cut troop levels in Germany by 5,000 amid Trump spat with Merz

The US Department of Defense plans to withdraw 5,000 troops from Germany amid a public spat between President Trump and Chancellor Friedrich Merz. The reduction — from a force of more than 36,000 US troops in Germany — is expected to be completed over six to 12 months. For markets, the move raises geopolitical and policy uncertainty that could weigh on German equities (Germany 40) near-term, particularly companies exposed to defence, regional activity or investor sentiment. Offsetting factors include Germany's sharp increase in defence spending (projected 3.1% of GDP by 2027), which may benefit domestic defence contractors and related sectors. Overall, the news introduces short-term risk and mixed implications for the Germany 40 index.