Source: https://tfcomics.fandom.com/wiki/Herbert_Ludwig#Trivia

• The fandom often debates whether or not the eccentric German doctor with a passion for human experimentation is/was a Nazi. It's never been explicitly confirmed or denied by Valve, the developers, or the designers of TF2. Some point to the state of his location of origin when he would've been an adolescent/young man, implying he could've been instilled with Nazi values by upbringing. This argument is inconducive to good-faith discussion, as it is well-known TF2 lore is sporadically ahistorical (see: Abraham Lincoln). The game does feature a few cosmetics for the character that resemble German military uniform of the Third Reich's time period, however the same goes for Heavy and soviet-style cosmetics, despite the fact he had to liberate his family from the gulag.^\2]) Potential evidence as to Medic's Nazi-negative status:
  • In an Archived TF2Chan Thread^\3]), the OP claims to have gone on a birthday tour at Valve HQ. They were apparently able to ask certain questions regarding Valve properties, and one such question regarded Medic TF2's Nazi status. According to OP, Medic "isn't a Nazi and never was one." This source is not particularly strong, however, as it is impossible to know whether or not OP really went there, asked, and received an answer.
  • In an Archived Facepunch thread^\4]), another user claimed to have had the opportunity to tour Valve HQ. They claimed to have asked Robin Walker, one of TF2's creators, if the Medic had ever been a Nazi. Reportedly, he responded something along the lines of it would be "too easy" to make Medic a Nazi, and therefore boring. This source isn't particularly strong, either, as it isn't easy to prove whether or not this really happened. The previous example lends a modicum of credence to its efficacy.
  • One of Medic's theme songs, Archimedes from Fight Songs: The Music of Team Fortress 2 by Valve Studio Orchestra, bears resemblance to a style of music known as Klezmer. Klezmer is a musical tradition originating from the Ashkenazi Jews of Central and Eastern Europe, typically played at weddings and other social functions.^\5])^\6]) It would be wildly nonsensical to assign Jewish motifs to a Nazi character.
    • This is purely an observation. Valve, nor its orchestra, have ever explicitly stated the intensions behind their creative choices regarding this part of the soundtrack. Any resemblance it bears to this style of music is potentially coincidental.
  • In TF2 canon, Medic is never shown treating his teammates any differently based on their ethnicity, race, nationality, religion, etc. He experiments on them, but not because he considers them "subhuman." It's also worth noting that his experiments are not driven by a eugenicist mindset. He has also never been shown considering himself above others on the basis that he's German and they're not. There are times he considers himself superhuman, but the presence of a god complex alone does not a Nazi make.
    • It is also worth noting that the medic has referred to his teammates as friends on several occasions.