German direct investment in US drops 65% to 4.3 billion euros in first half of 2026

Investment collapse

German direct investment in the United States fell to approximately 4.3 billion euros in the first half of 2026, a 65% decline compared to the same period a year earlier, according to calculations by the Institut der deutschen Wirtschaft (IW) based on Bundesbank data. The figures, seen in advance by Reuters and published on 16 August, represent the lowest level since 2023. Compared to the first half of 2024, the last full period before Donald Trump's return to the White House, the drop reaches nearly 80%.

The IW study traces the beginning of the downturn to January 2025, when Trump's second term began and his administration started threatening import tariffs against trading partners including the EU. Trump's trade policy has alienated many important trading partners and imposed high tariffs, including on the EU and thereby Germany.

This continues the negative trend since the beginning of Donald Trump's second term in office in January 2025.

Long-term comparison

In the five years before the COVID-19 pandemic, German companies invested an average of 15.8 billion euros in the US during the first half of each year, nearly four times the current figure. During the pandemic years of 2020 to 2023, values were even lower than now, in some cases falling into negative territory.

That was, however, due to the economic collapse caused by the Corona pandemic, a special case.

Trade deal and corporate response

The EU and the United States reached a trade agreement in the summer of 2025 that set a 15% import tariff on most EU products. As part of that accord, the EU pledged 600 billion dollars (approximately 519 billion euros) in investments in the US. Despite that commitment, individual German firms appear to be shifting toward risk management rather than continued expansion in the American market.

Investment composition

The IW researchers also examined the composition of investment flows across the full year 2025. They found that direct investment credits and reinvested earnings ran above average, while equity capital, the balance of new investment and liquidation, remained below average. This pattern suggests companies are holding back on strategic new investments such as acquisitions or building new sites.

Companies that are already active in the USA continue to invest their profits there in the country. That suggests that the USA fundamentally remains an attractive market.

A survey by the Deutsche Industrie- und Handelskammer (DIHK) points in the same direction. The most recent figures show 41% of companies with US operations plan to increase their capital spending there, a share that remains below its long-term average. Direct investment flows can fluctuate sharply and be distorted by individual large transactions, and the latest figures are often subject to revision, the IW noted.