German capital flows and trade have shown a simultaneous pullback with the United States, which analysts say reflects growing unease in the business community over the uncertainty of the US economic policy.

According to a German Economic Institute report, German-US economic and trade relations came under renewed strain after US President Donald Trump returned to the White House in early 2025. The downturn is adding pressure to Europe’s largest economy and fuelling debate over whether Germany should further rely on the United States as a key economic partner.

German investment and exports to the United States fell sharply last year, the report said, citing Deutsche Bundesbank data. German direct investment in the United States declined to €10.2 billion ($12.2 billion) between February and November 2025, a 45 per cent fall year-on-year. Compared with the 2015-2024 average, the 2025 figure was more than 24 per cent lower. Concurrently, exports to the United States weakened.

Between February and October 2025, shipments declined by around 9 per cent year-on-year. Automobile and auto part exports dropped nearly 19 per cent, machinery about 10 per cent and chemical products by more than 10 per cent.

Analysts argue that, as these sectors have long been pillars of Germany’s industrial competitiveness, the export slump demonstrated strain in German-US economic relations.

Speaking on the sidelines of the 2026 World Economic Forum annual meeting in Davos, Switzerland, Volkswagen Group Chairman Oliver Blume said that without a significant reduction in US tariffs, further investment in the country would be difficult to justify.

Plans for a new Audi plant could even be put on hold. The report also warned that repeated US threats of new tariffs have heightened market concerns over the outlook for transatlantic economic relations. The German business community believes that persistent pressure continues to suppress investment and trade confidence, further exacerbating difficulties in bilateral economic ties.

Strained German-US economic relations have prompted concerns in Germany over the direction of US economic policy. Sebastian Dullien, an economist at the Macroeconomic Policy Institute, said that German companies could increasingly view the United States as a high-risk market.

Persistent tariff threats, he added, have significantly undermined expectations that negotiations might stabilise transatlantic trade relations, raising doubts about whether the United States remains a reliable trading partner for the European Union.

Samina Sultan, an economist at the German Economic Institute, said that rising uncertainty has a clear dampening effect on investment and trade.

“Trump’s economic policies are unsettling companies, slowing transatlantic exchanges and affecting not only German firms but also weakening the US as a business location,” she said. Sentiment indicators have pointed to a widening trust gap. A poll published by Germany’s ARD broadcaster in early January showed that about 75 per cent of Germans now consider the United States an unreliable partner.

Moritz Schularick, president of the Kiel Institute for the World Economy, said that Germany should reduce dependence on a single market and expand investment ties with other countries to spread risks and strengthen resilience.

“Germany can no longer base its economic strategy primarily on the assumption of a stable and predictable US partnership,” he noted.

Ferdinand Dudenhoeffer, a German automotive economics expert, said that current US foreign policy is harming European and German interests and that Germany needs to reassess its external economic strategy.

The debate over Germany’s gold reserves being held in the United States has been revived. Germany holds the world’s second-largest national gold reserves. For decades, more than 1,200 tonnes of German gold or over one third of the total, have been stored in the vaults of the US Federal Reserve Bank in New York.

Against the backdrop of rising geopolitical uncertainty and unpredictable US economic policy, “There is no reason to continue storing 37 per cent of Germany’s gold reserves in the United States,” Marie-Agnes Strack-Zimmermann, chair of the European Parliament’s Committee on Security and Defence, was quoted by German magazine Der Spiegel as saying.

Emanuel Moench, an economist and former head of research at the Deutsche Bundesbank, told the German newspaper Handelsblatt that maintaining such a large share of gold reserves in the United States carries risks under current geopolitical conditions and should be reassessed.

Analysts believe that the renewed gold reserves debate highlights how strains in German-US trade and investment ties are spilling over into broader questions of strategic trust, reflecting a widening split in transatlantic relations. The concerns and developments are potentially reshaping transatlantic economic relations well beyond the current downturn, calling on Europe to place greater emphasis on strategic autonomy and diversification.

• A Tell Media / Xinhua report