German companies sharply reduced their investments in the United States during the first year of President Donald Trump’s second term, as uncertainty over trade policy and tariffs weighed on business confidence, according to a report by the German Economic Institute (IW) seen by Reuters.
Between February and November 2025, German firms invested about 10.2 billion euros ($11.1 billion) in the US, nearly 45% lower than the roughly 19 billion euros recorded in the same period a year earlier.
The study, based on Bundesbank data, was seen by Reuters on Monday.
To smooth out volatile investment flows, IW compared the figures with the average investment level for the same months between 2015 and 2024, which stood at around 13.4 billion euros.
Even against that benchmark, investment since Trump returned to office was down by more than 24%, the report found.
Investment sentiment turns cautious
Samina Sultan, an IW researcher, said the decline reflected growing unease among German companies about the stability of the US trade environment.
Firms typically plan investments over several years, she noted, and abrupt policy shifts make it difficult to commit capital.
“When the fundamental assumptions of the economic environment are called into question, sometimes practically overnight, very few companies dare to make such far-reaching decisions,” Sultan said.
The German Chamber of Commerce and Industry, which regularly surveys around 6,000 German companies with production facilities in the US, had last year also recorded a notable shift in sentiment.
For years, respondents consistently reported an above-average outlook on the US economy, according to Volker Treier, the chamber’s head of foreign trade.
That changed after Trump announced an initial round of tariffs on April 2, Treier said in a report by NYT in May last year, adding that business confidence has since weakened.
“They have fallen against the trend,” he said. “Because tariffs are poison.”
Focus shifts back to domestic investment
Instead of expanding in North America, many German firms appear to be prioritising investments at home.
A separate survey by consultancy Deloitte of 216 German financial executives showed that only 19% were considering investments in North America, down from 25% previously.
The pullback comes despite Trump’s stated aim of using tariffs to encourage foreign companies to shift production to the US to avoid higher import costs.
According to IW, the resulting uncertainty has had the opposite effect, prompting companies to adopt a wait-and-see approach.
Exports also in decline
German exports to the US have also weakened. Shipments fell 8.6% between February and October 2025 compared with the same period a year earlier, marking the steepest decline since 2010 outside the COVID-19 pandemic.
IW said the drop was partly due to the depreciation of the dollar, but added that shifting trade policy and threats of additional tariffs played a major role.
Sector data showed auto and auto parts exports plunged nearly 19%, while machinery exports fell 10% and chemical shipments declined by more than 10%.
The institute argued the impact has been negative on both sides of the Atlantic, noting that tariffs have pushed up US input costs and contributed to inflation remaining above 2%.
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