What is the right course of action?

You are on a priority road, as indicated by the yellow diamond sign. This means you usually have the right of way compared to vehicles entering from side streets or roads without priority.

The red car is coming from a street that has a yield (give way) sign, so it must give way to you.

The tram on the left side usually has the right of way because trams have priority over other vehicles unless traffic signs indicate otherwise. However, here the priority road sign applies to you, and the tram is not entering or crossing in a way that forces you to yield.

The motorcyclist you see in the rearview mirror is behind you, so no immediate conflict.

Since you are on the priority road and signaling a left turn without any conflicting vehicles that have precedence, you may proceed first safely.

In summary: Being on a priority road gives you right of way over the red car. Without a special rule requiring you to yield to the tram here, you can go first. Therefore, choosing to proceed first is correct according to German traffic rules.