 "German investment in US falls nearly 45% in first year of Trump’s second term: Report")
German companies significantly scaled back investments in the United States during the first year of President Donald Trump’s second term, citing rising trade uncertainty, Reuters reported on Monday, quoting the German Economic Institute (IW).
Between February and November 2025, German firms invested around 10.2 billion euros (about $11.1 billion) in the US, a fall of nearly 45 percent from almost 19 billion euros in the same period a year earlier, the study said, based on data from the Bundesbank.
Below long-term average levels
As foreign direct investment can fluctuate sharply, IW compared the latest figures with the average for the same period between 2015 and 2024, which stood at about 13.4 billion euros. Even against this longer-term benchmark, investment since Trump returned to office was down by more than 24 percent, according to IW researcher Samina Sultan.
Exports also weaken
German exports to the US also declined. Shipments fell 8.6 percent between February and October 2025 compared with the same period a year earlier, marking the steepest drop since 2010 outside the COVID-19 years, the report said.
IW noted that the slowdown in 2025 was not driven solely by US tariffs, but was also likely linked to the depreciation of the dollar. The report added that companies have been unsettled by frequent shifts in US trade policy and repeated threats of additional duties.
Tariffs add to uncertainty
After beginning his second term on January 20 last year, Trump repeatedly threatened and later imposed higher tariffs on goods from the European Union, arguing that the measures would push foreign firms to establish or expand production in the US to offset higher costs.
However, Sultan said the uncertainty created by these policy shifts has prompted companies, which typically plan investments years in advance, to adopt a cautious wait-and-see approach. “When the fundamental assumptions of the economic environment are called into question, sometimes almost overnight, very few companies are willing to make such far-reaching decisions,” she said.
Autos, machinery hit hardest
Sector-wise data showed particularly sharp declines in exports of automobiles and auto parts, which fell nearly 19 percent. Machinery exports slipped 10 percent, while shipments of chemical products dropped by more than 10 percent.
IW said the impact of tariffs has been negative on both sides of the Atlantic, arguing that they have raised input costs in the US and contributed to keeping inflation above 2 percent.
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