From: Melbourne, Australia
But shouldn't the Germans be able to trace through Badoglio, due to cooperation?
Actually, no! I think the game is calculating this correctly.
Yes, the Germans in Hex (80,35) are in Fine weather, so their basic supply range is 4 and can so can reach Badoglio, but cannot reach Tripoli.
Now, Badoglio is located in a Rain affected hex, Supply range is reduced to 2 hexes. Badoglio, can trace supply to Tripoli, but no further. Tripoli, is a secondary Supply source for Italian Units Only! That means tracing supply further, will only allow the Italians to remain in supply, and alas the Germans remain out of supply.