What is the right course of action now?

Your choice to stop and wait before the narrowed section until the oncoming vehicle has passed is correct because at constricted points on narrow roads, it is essential to give priority to oncoming traffic to avoid collisions. German traffic rules require drivers to be cautious and yield where the road narrows, especially when both directions cannot pass simultaneously. Passing carefully between an oncoming car and the barrier or signaling the other driver to move closer to the edge can be dangerous and is not recommended. Waiting ensures safety and smooth traffic flow, preventing accidents in these tight situations.