Across Germany and Europe, critics in her own party will read this as the tipping point for Merkel to change her course on refugees.
Rumblings will grow louder that the Chancellor's popularity, seemingly untouchable until a few months ago, is becoming ever-more unstable ahead of the 2017 national elections.
However, irrespective of the noise, Merkel will not agree to a U-turn on her principled position regarding those fleeing war and persecution. Nor is the political damage she has suffered beyond repair.
The recent elections were sobering for Merkel and her Christian Democratic Union.
Her party failed to recapture Baden-Wuerttemberg, Germany's premier industrial state and a conservative stronghold.
It also lost a tight race against the Social Democratic Party in Rhineland-Palatinate, forfeiting a clear lead in the polls.
Only in Saxony-Anhalt, in the East, did Merkel's party defend its top spot.
The result for the Social Democratic Party, Merkel's ally in the federal government, was even worse. It lost dramatically in two of three states and is an ever more junior political force.
Most shocking, however, was the strong showing for the extremist, eurosceptic and anti-migrant Alternative for Germany, which scored between 10 and 23 percent in the three regions. It is now firmly anchored in half of all federal states.
Trouble for Merkel?
In all three respects, considerable blame will be laid at the Chancellor's doorstep.
Catholic traditionalists in her own party -- who have never really warmed to the Protestant woman at the helm -- will become even more vocal.
They will push for a tougher line on refugees and migrants, with national limits to numbers, more elaborate security checks and conditions on integration.
In turn, Social Democrats will demand increased spending for disadvantaged Germans as well as generosity to newcomers. This will put them at odds with Merkel's favored approach of balancing the budget, putting a strain on the coalition.
Across the political spectrum, the Chancellor's alleged intransigence will be blamed for fuelling the rise of the xenophobic right
and a polarization and instability in politics hitherto unknown in Germany.
Trouble on the home front will also impact Merkel's standing in Europe.
Throughout the EU's various crises, the list of grievances against the "indispensable leader" in Berlin has consistently grown. Seeing the Chancellor punished by her own will be satisfying for quite a few European neighbors.
There will be schadenfreude among those who favor closing national borders over Merkel's "moral imperialism", especially in Central Europe.
In the South, governments will hope for a loosening of austerity policies now that their erstwhile champion is under pressure.
Across Europe, pro-Russian capitals and lobbies will be hoping to use the Chancellor's apparent weakness to force a change in her position on sanctions against the Kremlin
Defeat or redouble?
Chances are, however, that Merkel's domestic and European critics will be disappointed.
Most importantly, regional elections have little immediate impact on national politics, where the Chancellor rules with a commanding majority.
Her junior partners in government -- the Bavarian conservatives and the Social Democrats -- are certainly even more nervous now given tumbling public support. Yet they are hardly suicidal enough to seek early elections, which would only further weaken their own country-wide standing.
Nor will Merkel's intra-party opponents attempt to oust her. They don't have a programmatic alternative, nor a suitable candidate that can match the support she continues to marshal among Germans.
Those ratings bottomed out and recently bounced back again, with more than half of Germans backing Merkel.
The Chancellor's personal ratings and those of her party may well recover soon, depending on her further handling of the refugee crisis.
The raft of laws and measures that have been rolled out are beginning to show first fruits.
The closure of other states' borders
along the refugee route, although not Merkel's preferred option, and a likely EU-Turkey agreement on refugees
, albeit controversial given Ankara's human rights record, will further decrease pressure on Merkel.
This dynamic will only harden Merkel's determination to keep Europe open to refugees, defend the bloc's open internal borders and manage their inflow by EU accord.
This principal proposition is shared by a broad cross-party coalition and, despite protests from the fringes, an overwhelming majority of citizens in her country.
In that sense, last Sunday was not a defeat; it was an impulse for the Chancellor to redouble her efforts.