By David Born and Christian Krys
The year 2025 marked a decisive deterioration in German–US relations. Multiple flashpoints compounded tensions, including trade policy, geopolitical disagreements, and security-related uncertainty. These circumstances led to a gradual erosion of trust, which is a structural development rather than a result of a single event. The transatlantic corridor, once a stable anchor of the global economy, is now increasingly fragile. Our Transatlantic Business Barometer 2026 is evidence of this development.
For this study, US companies operating in Germany and German companies with business activities in the United States were surveyed in April 2026.
Companies on both sides of the Atlantic are reassessing the transatlantic partnership. The perceived attractiveness of the respective market as a business location has sharply declined. German companies' assessment of the US business environment, as well as US companies' assessment of Germany as a business location, continues to deteriorate. Since 2025, ratings for the US business environment have fallen below Germany's.
What are the reasons for this mutual dissatisfaction? US companies have pointed to increasing regulatory complexity and administrative burden as major obstacles to operating in Germany. Recently, political uncertainty has also emerged as a factor weighing on business activity in the German market.
The sharp deterioration in perceptions of the United States as a business location is a more recent development, materializing from 2025 onwards. Unsurprisingly, the primary barriers identified in our survey are related to the US administration's trade policy and the uncertainty caused by its frequent changes and lack of predictability.
Three out of four German companies participating in our survey describe the reliability of US policymaking as either "less good" or "bad", while more than half rate US economic & industrial policy as "less good" or "bad". Forty percent of the surveyed companies identified political uncertainty as the largest current obstacle to their US business, ahead of tariffs and trade policy, which received 35% of the responses.
So much for our survey on the economic sentiment on both sides of the Atlantic. However, the survey merely reflects a broader macroeconomic reality. Recent events, particularly the unprecedented increase in US import tariffs following the so-called "Liberation Day", have had tangible economic consequences. Bilateral trade is losing momentum, investment flows are weakening, and companies are becoming increasingly cautious.
In 2025, the total volume of trade between the United States and Germany declined by 5%. US exports to Germany fell by 5%, while German exports to the United States dropped by as much as 9%. Industries particularly affected include aircraft, automotive, chemicals, and machinery.
Even if the Turnberry Agreement between the US administration and the EU were to be implemented as agreed and the new base tariff on US imports from the EU remained at 15%, the consequences would still be severe. According to estimates, this tariff increase would cost the German economy 0.4% of its GDP, or around EUR 16 billion on average over the period 2025-2028 – amounting to more than EUR 60 billion in total.
The implications are already becoming apparent. Firms are reassessing their supply chains, market exposure, and strategic priorities. While some German companies are redirecting trade routes or planning to localize production, the largest share (30%) still state that they are not currently planning any strategic adjustments to their US operations.
However, export data from German companies points in a different direction: German companies are increasingly redirecting exports toward other European markets. Exports to other European markets have grown by EUR 13 billion (+6.2%) in Q1 2026 compared to the same period the previous year, largely offsetting the decline in exports to the US (- EUR 5 billion, -12.1%).
What should companies do in this situation? The current environment leaves little room for a wait-and-see approach. Geopolitical disruption is no longer an exception to be managed; it is the new baseline to be planned for. This starts with visibility: companies that have not yet mapped their supply chains end-to-end are flying blind in a world where the next shock may not announce itself with sufficient notice. Beyond operational resilience, the strategic picture also demands attention. Regardless of how the next U.S. election unfolds, a return to the pre-2025 transatlantic normalcy is unlikely.Companies that start building their post-Trump strategy now will be better positioned than those waiting for political clarity that may never come. Finally, now is the time to look beyond traditional markets. New European trade agreements with partners in Asia, Latin America, and beyond are opening doors that were previously closed, and the companies that move first will have the advantage.
The annual survey brings together the assessment on business conditions and location factors among German and US business leaders.
