Ytdyklly

My friend and I were out in the rain, and I was asked why I left my stuffed animal keychain clipped to my backpack if it will get wet. I wanted to reply with an offhand joke about how being out in the rain builds character. Is there a German expression that means more or less the same thing?

In the context of exposure to cold and rain I probably would have said:

Das härtet ab!

With this meaning of abhärten in mind: to toughen s.o, to build up s.o.'s resistance, to make s.b. stronger

You can say:

Im Regen zu sein stärkt den Charakter.
Being in the rain strengthens the character.

^{(also »festigt« instead of »stärkt«)}

But German native speakers won't say something like this in such a situation. If you walk through the rain, and someone asks you why you don't use an umbrella or a raincoat, or why you don't stay indoors, you say:

Ich bin doch nicht aus Zucker.
I'm not made from sugar.

With this sentence you say, that you're not touchy and you won't melt in the rain. (The word doch is a modal particle, this is a part of speech that doesn't exist in English. It just adds an emotion to the sentence. For details look at this question about »doch«)

So, when talking about your stuffed animal keychain you could say:

Das ist doch nicht aus Zucker.
It's not made from sugar.

In addition to @IQV literal answer, there is a very similar but more established term.

den Charakter formen

or

charakterformend

It follows the gist of forming ones character out of wet clay. (Which is rather fitting in your rainy, muddy scenario)

The german equivalent for the expression "building character" is

den Charakter stärken

So the example could be translated as "im Regen stehen stärkt den Charakter" or similar.

In fact, the term Charakterbildung (or Charaktererziehung — funny "erer", I know) does exist in German and perhaps is applicable in your case.

It's not so much about hardening oneself than about becoming self-reliant, trusting and trustworthy, a decent person, too. Becoming an adult. In other words, "building" a character which enables a person to successfully navigate their life.

"Nur die Harten kommen in den Garten"

"Es trägt zur Persönlichkeitsbildung bei."