The issue of migrants was already a political hot potato for Merkel who drew plaudits for initially offering refuge to those fleeing warzones, but who is now under pressure to show leadership in the face of terrorism and uncontrolled migration.
"I think she made one very catastrophic mistake and that was taking all of these illegals, you know, taking all of the people from wherever they come from. And nobody even knows where they come from. So I think she made a catastrophic mistake, very bad mistake," Trump told the German newspaper Bild am Sonntag.
Election Sensitivity
However, Merkel hit back, accusing Trump of conflating two separate issues.
"I would clearly separate (terrorism) from the existence of refugees in relation to the Syrian civil war… the majority of Syrians left their country because of the civil war, because of the fight against [Syrian President Bashar al-] Assad or the oppression by Assad," she said.
Merkel came under pressure over the migrant crisis from within her own coalition party (CDU/CSU) for refusing to put a cap in the number of refugees Germany will take in. The original influx in 2015 caused chaos, with many German states — particularly Bavaria — struggling to cope with the asylum applications.
However, since the terrorist attack in which a man known as Anis Amri drove a truck into a crowd of people at a Christmas market in Berlin, Germany, December 19, killing 12 and injuring 56, the issue of security and migration has come to the fore.
Amri arrived for the first time in Europe in 2011 on a refugee raft, served time in prison in Sicily, was known to the German authorities and had been refused asylum in Germany, but was still able to wander freely around the country ahead of the terrorist attack.
Merkel is facing an election in the fall of 2017 and her popularity is at a five-year low. Trump's intervention on such a sensitive issue will put a strain on Berlin-Washington relations. However, Merkel said she would work with Trump.
"When he is in office, and at the moment that's not the case, we will work with the new American government and see what kind of agreements we can reach," she said.