German Direct Investment in U.S. Falls to Three-Year Low Amid Trade Uncertainty

In the first half of 2026, German companies invested €4.3 billion (? $5 billion) in the United States, the lowest level recorded since 2023. The German Economic Institute (IW) calculated that direct investment plunged by nearly two-thirds year-on-year and fell almost 80 percent compared with the same period in 2024. The decline marks a sharp reversal from the five-year pre-pandemic average of €15.8 billion in the first half of each year.

Reuters

The downturn follows the start of Donald Trump’s second presidential term in January 2025, during which the administration has repeatedly threatened import tariffs on a range of trading partners. In response to tariff threats, the European Union negotiated a deal last year that included a $600 billion investment pledge, but the uncertainty surrounding U.S. trade policy has persisted. The pandemic years (2020-2023) also produced “exceptional circumstances” that saw occasional net outflows, according to IW.

TRT World

• €4.3 billion invested in H1 2026 – lowest since 2023 (IW, Reuters).

Reuters

• Decline of ~66 % versus H1 2025 and ~80 % versus H1 2024 (IW, Reuters).

German companies cut US investment to three-year low as tariff uncertainty bites

• Pre-pandemic H1 average €15.8 billion, roughly four times the 2026 level (IW, Reuters).

Reuters

• February-November 2025 saw €10.2 billion invested, a 45 % drop from the comparable 2024 period.

German companies cut US investment to three-year low as tariff uncertainty bites

• New equity commitments have contracted sharply, while reinvested earnings from existing U.S. operations remain “relatively stable” (IW, Reuters).

Reuters

Samina Sultan explained that firms already operating in the United States continue to reinvest profits locally, indicating that the market remains attractive overall. However, she noted that companies are “hesitant to commit new capital,” reflecting a wait-and-see posture driven by trade-policy uncertainty. The pattern suggests a strategic pause on fresh projects rather than a wholesale retreat from the U.S. market.

German Firms Cut US Investment to €4.3 Billion, 3-Year Low

• “Companies that are already active in the United States are therefore continuing to reinvest the profits they earn there in the country,” — Samina Sultan, IW researcher

Reuters