Data from the German Economic Institute (IW), based on German central bank (Bundesbank) figures, highlights a sharp decline in direct investments by German firms in the United States.
As reported, the First-half direct investments plummeted by nearly two-thirds year-on-year to €4.3 billion ($5 billion), marking the lowest level since 2023 and an almost 80% decrease compared to the same period in 2024.
While the pre-pandemic first-half averages sat significantly higher at €15.8 billion.
Analysts attribute the downward trend to escalating policy uncertainty and trade tensions driven by the Trump administration, particularly regarding the threat and implementation of import tariffs.
While net equity capital for new investments has remained suppressed due to hesitation from firms, direct-investment loans and reinvested earnings have stayed unusually high.
This indicates that while German businesses already operating in the U.S. are content to roll their local profits back into existing operations, they are largely holding back on committing fresh external capital.
Compared with the same period in 2024, that represents a drop of nearly 80%, said the report, which is based on data from Germany’s central bank.
“This continues the downward trend that has been evident since the start of Donald Trump’s second term in January 2025,” IW researcher Samina Sultan.”
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.
In the five years before the COVID-19 pandemic, first-half investments by German companies in the U.S. averaged €15.8 billion, the data showed, almost four times the 2026 level.
That said, the 2020 to 2023 period was shaped by the “exceptional circumstance” of the pandemic, Sultan said, with some years marked by net investment outflows.
The researchers also examined the composition of investment flows over 2025 and found that both direct investment loans and reinvested earnings were exceptionally high, while equity capital in the narrower sense the balance of new investments and liquidations remained below average.
“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.”
However, despite continuing previous projects, the companies were hesitant to commit new capital, she added.
