Key Points
- German investment into the U.S. fell about 45% in February–November 2025, based on Bundesbank-linked estimates.
- German exports to the U.S. dropped 8.6% in February–October 2025, with autos, machinery, and chemicals hit hardest.
- The slowdown matters because the U.S. is Germany’s top export market and its largest destination for German FDI.
German firms sharply slowed new investment in the United States during the first year of President Donald Trump’s second term, as shifting trade signals and higher tariffs unsettled boardroom planning.
Analysis by the German Economic Institute (IW), drawing on Bundesbank data and reviewed by Reuters, puts the pullback in stark numbers.
From February to November 2025, German companies invested about €10.2 billion ($11.1 billion) in the U.S. That compares with almost €19 billion in the same period a year earlier. IW calculates the decline at roughly 45%.
Because direct investment can swing by large one-off deals, IW also benchmarked against the 2015–2024 average of about €13.4 billion. Even against that longer baseline, the 2025 figure was more than 24% lower.
Trade flows weakened in parallel. IW estimates German exports to the U.S. fell 8.6% between February and October 2025 versus the same months in 2024. It called that the steepest drop since 2010, outside the Covid period.
The sector split shows where the pressure concentrated. Auto shipments fell nearly 19%. Machinery exports dropped about 10%. Chemical products declined by more than 10%.
The report’s core argument is simple. Companies invest when rules feel stable and payoffs look predictable. Tariffs, threats of additional duties, and rapid policy pivots make long-lived projects harder to price.
Some executives respond by waiting. Others shift toward smaller, reversible commitments. Currency moves added friction. A weaker dollar can make euro-area goods more expensive for U.S. buyers, amplifying any tariff effect.
The stakes are large because the relationship is large. Recent German trade releases have repeatedly shown the U.S. as Germany’s biggest export destination.
Germany exported €11.3 billion to the U.S. in October 2025 and €10.8 billion in November 2025, on a seasonally adjusted basis. November exports to the U.S. were also reported down 22.9% versus November 2024.
On the capital side, the U.S. is Germany’s biggest destination for outward foreign direct investment stock. At end-2023, it represented about 27% of German outward FDI, around €436 billion.
Politically, the story points to a broader risk. If tariff pressure escalates and Europe leans toward retaliation tools, firms on both sides may delay decisions. In the near term, that means fewer projects, slower trade, and a higher premium on policy stability.
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