German companies reduced their direct investments in the United States to €4.3 billion ($5 billion) during the first half of 2026, marking a three-year low. According to a report by the German Economic Institute (IW) based on central bank data, this figure represents a decline of nearly two-thirds compared to the same period in 2025.
The decline follows the start of President Donald Trump's second term in January 2025. Since returning to office, the administration has utilized threats of import tariffs against international trading partners as a means to negotiate trade concessions. In 2025, the European Union entered a trade agreement that included a $600 billion investment pledge to avoid these duties.
The IW report found that while new equity capital—the balance of new investments and liquidations—remained below average, existing companies continued to reinvest profits earned within the U.S. IW researcher Samina Sultan stated that while the U.S. remains an attractive market for established firms, companies are currently hesitant to commit new capital to the country.
For workers and local economies in the United States, this trend represents a measurable slowdown in the entry of new German capital. While existing firms are reinvesting their earnings, the drop in new equity capital suggests fewer new business launches or facility expansions by German firms than in previous years. The IW notes that the current downward trend has been consistent since the administration changes in early 2025, following a volatile 2020-2023 period that saw net investment outflows during the pandemic.
The decline in investment highlights the impact of trade uncertainty on transatlantic economic activity. The immediate effects are reflected in the German central bank's data on capital flows, which show a preference for maintaining current operations over starting new ventures. What happens next depends on the ongoing implementation of U.S. tariff policies and the fulfillment of the $600 billion investment pledge made by the European Union in 2025. No specific deadlines for a reversal of this trend were reported.