On February 21, 2025, President Trump issued a memorandum titled "America First Investment Policy" (the "Policy"), outlining new measures to shape U.S. investment policy. Though the Policy makes it clear that the United States welcomes foreign investment, its overarching theme is that "economic security is national security" and cautions against national security threats from "foreign adversaries" like the People's Republic of China.
Key aspects of the Policy include:
- Faciliting investments from allies by creating an expedited "fast-track" process, based on objective standards, for investments from specified allied and partner countries when they avoid partnering with foreign adversaries of the United States. It is unclear if investors would consider distancing themselves from Chinese investment to get access to the "fast-track" process and how the fast-track process differs from short declaration forms, which already offer a fast-track process. We expect CFIUS reviews to continue scrutinizing Limited Partners to ensure that potential investors from foreign adversaries are truly passive.
- Expediting environmental reviews for investments in the United States over $1 billion.
- Restricting investments from China and other "foreign adversaries": limiting Chinese-affiliated investments in U.S. technology, critical infrastructure, healthcare, agriculture, energy, and other strategic sectors.
- Considering expanding restrictions on U.S. outbound investments to China in sectors such as semiconductors, artificial intelligence, advanced manufacturing, directed energy, quantum computing, hypersonics, aerospace, biotechnology, and other critical sectors.
- The Policy specifically targets universities and cautions them to stop supporting foreign adversaries with investment decisions and stop granting university access to supporters of terrorism.
- Strengthening national security measures by protecting farmland and real estate near sensitive facilities and expanding CFIUS authority over "greenfield" investments and emerging technologies.
- Ceasing the use of overly burdensome and open-ended mitigation agreements for investments from foreign adversary countries (and instead apply a presumption that such deals would be blocked instead).
- Promoting economic security and emphasizing that "economic security is national security." Aiming to make the U.S. the world's top destination for investment dollars. The Trump administration will continue to welcome and encourage passive investments from all foreign persons, including non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any substantive decision making or access to non-public technical information.
To further reduce incentives for U.S. persons to invest in foreign adversaries, the Trump administration will review whether to suspend or terminate the U.S.-China Income Tax Convention. Per the Policy, the Tax Convention, along with China's admission to the World Trade Organization and its Most Favored Nation status, have contributed to deindustrialization of the United States.
In short, the Policy reflects the Trump administration's approach of encouraging investment from allies while taking a tougher stance on China and other designated foreign adversaries. Implementation of these measures will primarily fall to the Department of the Treasury and CFIUS.
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