America's allies on the ground announced the start of what they're calling the final battle against remaining ISIS holdouts after allowing thousands of civilians to flee.
"It should be formally announced sometime, probably next week, that we will have 100 per cent of the caliphate", Trump told representatives of the 79-member, USA -led coalition fighting IS.
"The so-called Islamic State has been luckily driven out of its territory but this unfortunately doesn't mean that Islamic State has disappeared", Merkel said.
The country's Kurds have largely stayed out of the conflict, instead developing semi-autonomous institutions in parts of the country's northeast under their control.
USA and SDF officials say, however, they have no reason to believe he is there.
The jihadists maintain sleeper cells, including along the border with Iraq as well as in cities they once ruled, and have carried out periodic hit-and-run attacks.
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"The SDF have launched the final battle to crush IS... in the village of Baghouz", the SDF said in a statement.
The Observatory said 12 ISIS gunmen attacked the SDF and clashed with them for several hours until most of the attackers were killed early on Saturday.
There are between 14,000 and 18,000 ISIS militants in Syria and in Iraq, including up to 3,000 foreign militants, according to a report by the sanctions monitoring team presented to the Security Council.
Estimates of the number of fighters remaining in the pinprick of territory vary wildly from dozens to hundreds, but they are thought to include some of the most die-hard and committed extremists who have remained with the group to the bitter end.
The Britain-based Syrian Observatory for Human Rights, a war monitor, said SDF fighters are advancing "cautiously" due to mines planted by IS gunmen.
Suspected jihadists captured by the SDF are usually eager to be sent home, something the Kurdish administration also wants. "There's been a total lack of transparency, and bad things happen in the dark", HRW's counterterrorism director, Nadim Houry, told AFP.