NEW YORK CITY [Markets Desk]: German companies sharply reduced their investments in the United States during the first half of 2026, bringing direct investment to its lowest level in three years as trade uncertainty under the Trump administration continued to reshape transatlantic business decisions.
Data compiled by the German Economic Institute (IW) from Germany’s central bank showed that German direct investment in the U.S. fell to €4.3 billion ($5 billion) between January and June. That represents a decline of nearly two-thirds from the same period in 2025 and almost 80% below the level recorded in the first half of 2024.
According to IW researcher Samina Sultan, the latest figures extend a downward trend that began after Donald Trump returned to the White House for a second term in January 2025.
Since taking office, Trump has pursued an aggressive trade agenda, repeatedly threatening key U.S. trading partners with import tariffs to secure concessions favorable to Washington. The resulting uncertainty has weighed on investment decisions by foreign companies with significant exposure to the American market.
The European Union sought to reduce the risk of steep U.S. tariffs by reaching a trade agreement last year that included a commitment to invest $600 billion in the United States.
Historical data highlight the scale of the slowdown. In the five years preceding the COVID-19 pandemic, German companies invested an average of €15.8 billion in the United States during the first half of each year—almost four times the amount recorded in 2026.
Sultan noted that investment trends between 2020 and 2023 were influenced by the exceptional economic conditions created by the pandemic, with some years even recording net investment outflows.
The study also examined the composition of German investment in the United States during 2025. It found that direct-investment loans and reinvested earnings remained unusually strong, while equity capital—measuring the balance between new investments and business liquidations—stayed below historical averages.
That pattern suggests many German companies already operating in the U.S. are choosing to expand through reinvesting locally generated profits rather than committing significant new capital from Germany.
“Companies that are already active in the United States are therefore continuing to reinvest the profits they earn there in the country,” Sultan said. “This suggests that the U.S. remains an attractive market overall.”
