German Investment in US Drops to Three-year Low Amid Trade Uncertainty
Synopsis
German companies sharply reduced US investments in the first half of 2026 with businesses delaying new capital commitments as trade policy uncertainty continued to affect investor confidence.
German companies sharply reduced their investments in the United States during the first half of 2026 as uncertainty surrounding the Trump administration's trade policies weighed on business confidence.
According to calculations by the German Economic Institute (IW) based on data from Germany's central bank, first-half direct investment dropped to €4.3 billion (US$5 billion), the lowest level since 2023.
The figure represents a decline of nearly two-thirds year-on-year and almost 80% compared with the same period in 2024.
Researchers said businesses have become increasingly cautious about committing fresh capital as shifting trade policies and tariff threats continue to cloud the investment outlook.
Despite the slowdown, companies already operating in the US are continuing to reinvest profits which signals that the market remains strategically important.
Trade Tensions Dampen Fresh Investment
IW researcher Samina Sultan said the latest figures extend the downward trend that has been evident since the beginning of President Donald Trump's second term in January 2025.
The decline follows a series of tariff threats aimed at several US trading partners. In response to potential higher duties, the European Union agreed last year to a trade arrangement that included a US$600 billion investment pledge intended to ease trade tensions.
Historical data also illustrates 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 US during the first half of each year. It was almost four times the level recorded in 2026.
Existing Businesses Continue to Reinvest
Despite weaker new investment, the report found that many German businesses with an established US presence continued to expand through reinvested earnings and direct-investment loans.
Equity capital which reflects new investments after accounting for liquidations, remained below historical averages. It indicates that companies are prioritising existing operations rather than launching new projects.
According to Sultan, the trend suggests that while the US continues to be an attractive destination for companies already operating there, uncertainty over trade policy has made businesses more reluctant to commit fresh capital.
The findings highlight the growing impact of geopolitical and policy uncertainty on cross-border investment decisions, even as the world's largest economy continues to attract long-term business activity.
Source: Reuters
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