German companies slashed direct investment in the United States to a three-year low in the first half of 2026, new data show. The drop continues a trend that began with the start of the Trump administration's second term, as tariff threats and trade uncertainty weigh on transatlantic business ties.
Investment plunges nearly two-thirds
German firms cut first-half direct investment in the U.S. to €4.3 billion ($5 billion) in the first half of 2026, the lowest level since 2023. That figure marks a drop of nearly two-thirds year-on-year, according to calculations by the German Economic Institute (IW), based on Bundesbank data. Measured against the same period in 2024, investment is down nearly 80%.
IW researcher Samina Sultan said the decline continues a downward trend evident since the start of Donald Trump's second term in January 2025. Since returning to office, Trump has threatened most of the United States' international trading partners with import tariffs in an attempt to secure concessions favorable to Washington. The European Union, aiming to avoid heavy duties on its exports, agreed a deal last year that included a $600 billion investment pledge.
Current level dwarfed by pre-pandemic average
The current pace is a fraction of historical norms. In the five years before the COVID-19 pandemic, first-half investment by German companies in the U.S. averaged €15.8 billion, almost four times the 2026 level. Sultan noted, however, that the 2020-to-2023 period was shaped by the pandemic's exceptional circumstances, with some years marked by net investment outflows.
Companies reinvest profits but hold back new capital
A closer look at 2025 shows a split picture. Direct-investment loans and reinvested earnings ran exceptionally high, while equity capital in the narrower sense — new investment minus liquidations — stayed below average.
According to Reuters: "This suggests that the U.S. remains an attractive market overall." Yet Sultan said companies already active in the U.S. are simply reinvesting profits earned there, while remaining hesitant to commit new capital.
Source: Investing.com
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