German companies significantly reduced their direct investment in the United States in the first half of 2026, with capital flows hitting a three-year low as uncertainty over US trade policies dampened investment decisions, Reuters reported.
German companies' direct investment in the US fell nearly two-thirds from a year earlier to €4.3 billion ($5 billion) in the January-June period, according to German Economic Institute (IW) calculations based on central bank data.
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The figure was also nearly 80% below the level recorded in the first half of 2024.
The decline extends a downward trend that has emerged since US President Donald Trump returned to office in January 2025, IW researcher Samina Sultan told Reuters.
Trump's administration has threatened or imposed tariffs on several major trading partners, increasing uncertainty for companies operating across the Atlantic.
The European Union last year agreed to a trade deal with Washington that included a $600 billion investment pledge, partly to avert heavier tariffs on European exports.
German companies invested an average of €15.8 billion in the US during the first half of the five years before the Covid-19 pandemic - almost four times the 2026 level.
However, the latest data also indicate that existing German investors have not abandoned the US market.
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Direct-investment loans and reinvested earnings remained relatively strong in 2025, while new equity investment stayed below average.
“Companies that are already active in the United States are therefore continuing to reinvest the profits they earn there,” Sultan said, suggesting that the US remains an attractive market.
The bigger concern, she added, is that companies are increasingly reluctant to commit fresh capital amid trade-policy uncertainty.
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