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Study findings suggest that U.S. customs policies inadvertently prompt German businesses to boost their domestic investments as they confront escalating trade difficulties. - Investment Shift: American Customs Policies Prompting Increased Domestic Investments by German Companies
A survey paints a startling picture: Before the tariff announcements, 25 percent of companies primarily aimed for investments in North America, which later dropped to 19 percent, a significant decrease of six percentage points.
The global trade landscape has been shaken up by US President Donald Trump's aggressive tariff strategy. In early April, he imposed a general tariff of 20 percent on goods from the EU, later reducing it to 10 percent. Simultaneously, tariffs of 25 percent were levied on steel and aluminum products, as well as cars.
These tariff decisions have spurred a wave of concerns among export-oriented companies, according to recent studies. Before the trade skirmish, an equal number of companies favored investments in Germany and North America. However, after the tariff onslaught, only 38 percent expressed interest in North America, while a staggering 62 percent are now focusing on Germany.
"Geopolitical and trade issues have become the driving forces behind the market dynamics and company prospects," explained Deloitte's chief economist Alexander Börsch. Many companies are attempting to mitigate their dependency risks, while others, notably the automotive sector, are actively considering relocating or reassessing their sites.
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- Donald Trump
- Domestic Investment
- Germany
- Tariff Policy
- US President
- Investment
- North America
- Munich
- USA
- Tariff Announcements
A closer look reveals that the US tariff policies, particularly the imposition of reciprocal tariffs since early 2025, have introduced a significant level of uncertainty and complexity for German companies contemplating investments in both North America and Germany itself.
Impacts on German Companies' Investment Strategies in North America:
- The US administration's 10% reciprocal tariffs have adversely affected many trading partners, including Germany, by increasing costs, disrupting supply chains, and compressing profit margins[3].
- Owing to the lack of clarity on the full scope, timeline, and potential retaliatory tariffs, many companies — including German firms — have chosen a cautious "wait-and-see" approach on investments in the US. This hesitation reflects apprehensions over market volatility, inflation concerns, and the risk of economic disruption linked to tariff uncertainty[5].
- The challenging tariff environment has dampened growth expectations, raised inflation concerns, and influenced monetary policy expectations on both sides of the Atlantic, leading to a slowdown in economic activity and a more subdued merger and acquisition (M&A) market in the US, ultimately affecting German business strategies and investment plans[2][5].
Implications for Investments in Germany:
- In contrast to the US, Germany has endeavored to stimulate domestic economic growth through infrastructure investments and increased defense budgets, mainly as a response to external uncertainties such as US tariffs[2][4].
- German companies might perceive these domestic stimulus measures and the relative insulation from direct tariff pressure as incentives for investment within Germany. However, the overall European economic outlook remains susceptible to uncertainty from US trade policy and geopolitical tensions, which tempers enthusiasm for German investments[4].
- The European Union, including Germany, does not seem to be Washington’s primary target in the tariff conflict, providing a glimmer of hope that domestic German investment may be less impacted by tariffs than investment in North America, at least until US policies become more transparent or evolve[4].
In summary, the US tariff policies since early 2025 have engendered a landscape of increased costs, supply chain disruptions, and economic uncertainty, causing many German companies to hesitate or postpone investments in North America. Meanwhile, Germany's infrastructure and fiscal stimulus efforts may partly counter these challenges, making domestic investment appear more appealing, albeit with short-term uncertainty lingering due to broader geopolitical and trade tensions[2][3][4][5].
- The US tariff policies, particularly the imposition of reciprocal tariffs since early 2025, have significantly impacted German companies' investment strategies, leading to a hesitant approach towards investments in the US.
- The challenging tariff environment in the US has increased costs, disrupted supply chains, and compressed profit margins, resulting in a slowdown in economic activity and a more subdued merger and acquisition market.
- In contrast, Germany has responded to external uncertainties such as US tariffs by stimulating domestic economic growth through infrastructure investments and increased defense budgets.
- This domestic stimulus, along with relative insulation from direct tariff pressure, might make German companies perceive domestic investments as more appealing.
- However, the overall European economic outlook remains susceptible to uncertainty from US trade policy and geopolitical tensions, which tempers enthusiasm for German investments.
