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

German businesses pumped just €4.3 billion ($5 billion) into the United States during the first half of 2026. That’s the lowest figure since 2023, and it’s not even close to what it used to be.

Compared to the same period last year, the number dropped by nearly two-thirds. Stack it against the first half of 2024, and the decline is closer to 80%. For context, pre-pandemic first-half averages hovered around €15.8 billion. The current figure is roughly a third of that.

A slow bleed since early 2025

The pullback didn’t start overnight. It’s been building since Donald Trump returned to the White House in January 2025, bringing with him a familiar cocktail of tariff threats and trade-policy unpredictability.

From February to November 2025, German direct investment in the US totaled €10.2 billion. That was already a 45% decline from the roughly €19 billion invested during the comparable stretch the year before. The first half of 2026 just accelerated the trend.

Data analyzed by the German Economic Institute (IW) and reported by Reuters paints a picture of deepening corporate hesitation. IW researcher Samina Sultan noted that the reluctance has been persistent ever since Trump’s election, suggesting this isn’t a blip but a structural shift in how German companies evaluate American risk.

Not a full retreat, but a clear pause on new bets

There’s a nuance worth noting. German companies with existing US operations haven’t packed up and left. Reinvestment of earnings from those operations has stayed relatively stable, which means firms that already have factories, offices, and supply chains in America are still maintaining them.

The real drop is in fresh equity commitments. New projects, new facilities, new expansions. That’s where the money has dried up.

Nearly 30% of projects have reportedly been postponed, reflecting a wait-and-see posture rather than an outright abandonment.

The pivot toward Asia

If German capital is flowing away from the US, where’s it going? Increasingly, the answer is Asia. Surveys conducted earlier in 2025 revealed that many companies are beginning to pivot their attention towards Asia, especially China.

The European Union’s own deal in 2025, which included a reported $600 billion investment commitment by Europe, signals that the continent is also looking to diversify its economic partnerships and reduce dependence on any single trading relationship.

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