Published by Global Banking & Finance Review®
Posted on January 19, 2026
3 min readLast updated: January 19, 2026
German investments in the US dropped 45% in 2025 due to trade uncertainty and tariffs under Trump's policies, with exports also declining by 8.6%.
By Rene Wagner and Maria Martinez
BERLIN, Jan 19 (Reuters) - German companies nearly halved their investments in the United States in the first year of President Donald Trump's second term, citing trade uncertainty, according to a report by the German Economic Institute (IW) seen by Reuters on Monday.
From February to November 2025, German firms invested around 10.2 billion euros ($11.1 billion) in the U.S., down roughly 45% from almost 19 billion euros in the same period a year earlier, the study showed, using data from the Bundesbank.
Because direct investment flows often fluctuate strongly, IW also compared the figures with the average value for the same period from 2015 to 2024, which was around 13.4 billion euros.
"Even relative to that, the figure since Trump took office is down by more than 24%," said IW researcher Samina Sultan.
EXPORTS ALSO IN DECLINE
German exports to the U.S. also weakened, with shipments falling 8.6% from February to October 2025 compared with the same period a year earlier, IW said, the steepest drop since 2010 outside of the COVID-19 period.
The slump in 2025 was not solely due to U.S. tariffs but is also likely a consequence of the dollar's depreciation.
The report said companies were unsettled by shifting U.S. trade policy and threats of additional duties.
After starting his second term on January 20 last year, Trump repeatedly threatened and eventually implemented higher tariffs on goods from the European Union with the rationale that foreign companies would establish or expand their production in the United States to circumvent the additional financial burden.
However, the uncertainty caused by Trump's policy shifts is leading firms, which usually calculate investment decisions over several years, to take a wait-and-see approach, Sultan said.
"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," added the researcher.
Sector data also showed sharper declines in exports of autos and parts, down nearly 19%, while machinery exports slipped 10% and those of chemical products fell by more than 10%, IW said.
IW said the impact was negative for both sides of the Atlantic, arguing that tariffs have raised U.S. input costs and helped keep inflation above 2%.
(Reporting by Rene Wagner and Maria Martinez; Editing by Miranda Murray and Hugh Lawson)
Foreign investment refers to the purchase of assets in one country by individuals or institutions from another country, often to gain returns on investment.
Economic growth is the increase in the production of goods and services in an economy over time, typically measured by GDP.
Trade uncertainty refers to the unpredictability in international trade policies and agreements, which can affect business decisions and investments.
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