On February 21, 2025, the White House released President Donald Trump’s “America First Investment Policy” memorandum (Investment Policy), which outlined several initiatives to incentivize investment from U.S. allies and partners while restricting investments involving “foreign adversaries” — mostly notably China.1
The Investment Policy does not reflect a sweeping break from the foreign investment policies of the Biden administration. While the Investment Policy may result in expansion of both inbound and outbound investment regulation in the United States, in practice, we expect the impact will be gradual and muted.
Some actions (e.g., expansion of CFIUS authorities to review “greenfield” investments) will require legislative change, while others will require updates to existing regulations. We would expect to see these changes before the end of 2025.
Inbound Foreign Investment
In broad strokes, the inbound investment provisions of the Investment Policy memo do not veer significantly from the approach already taken by the Committee on Foreign Investment in the United States (CFIUS or the Committee), as reflected most recently in former President Joe Biden’s Executive Order 14083, “Ensuring Robust Consideration of Evolving National Security Risks by the Committee on Foreign Investment in the United States.”
The Investment Policy seeks to further incentivize investment from key allies and partners by:
- Creating an expedited “fast track” investment process for specific allied partners involving U.S. advanced technology, along with expedited environmental reviews for any investment over $1 billion. While CFIUS already has an informal fast-track process with an increased number of low-risk cases cleared in the first 45-day review period and CFIUS starting reviews more quickly in routine cases, implementation could see reforms to the declaration process to provide more timing certainty for eligible investments. The Investment Policy implies this new fast-track process is open to investors that, in part, “avoid partnering with United States foreign adversaries.” In other words, foreign investors who agree to separate themselves from the PRC should benefit from a swifter CFIUS process.
- Clarifying that passive investment is welcome from “all foreign persons” that otherwise meets current CFIUS standards for such investment. While it likely won’t change existing law or regulations, the policy does provide an important signal to third-party private equity and investment firms concerned that passive investments from foreign adversaries could raise CFIUS risks for them.
The Investment Policy largely cements existing CFIUS policies toward active investors from the “foreign adversaries” while potentially expanding enforcement against inbound investments from the PRC by:
- Signaling broader, sector-based restrictions on PRC investments in U.S. technology, critical infrastructure, health care, agriculture, energy, raw materials or other strategic sectors yet to be defined. Restrictions could include expanding mandatory filings for additional categories of “emerging and foundational” technologies addressable by CFIUS beyond its current definition. While CFIUS has already been aggressive against PRC investments in these areas, the Investment Policy implies the Committee may cement some of those practices into regulation. Note that CFIUS already requires mandatory filings for many transactions involving “emerging and foundational” technologies as defined by the Commerce Department. Commerce has been criticized by many in Congress for moving too slowly in identifying and controlling such technologies. One possibility is that CFIUS will seek congressional amendments to enable it to create its own, broader definition of “emerging and foundational” technologies for purposes of ensuring CFIUS review over investments in U.S. artificial intelligence (AI) and other technology sectors.
- Expanding CFIUS’ jurisdiction over greenfield investments by PRC companies through, potentially, both CFIUS’ existing real estate jurisdiction and new or expanded jurisdiction over “greenfield” investments involving sensitive technologies, including AI. While CFIUS’ real estate jurisdiction indirectly regulated greenfield investments, such investments have been exempted from CFIUS jurisdiction as a category of covered transactions since its inception. Any change would likely require congressional intervention. The Investment Policy also directs CFIUS to take action to “protect U.S. farmland,” which is currently not a target of CFIUS’ real estate regulations but has been the subject of several recent legislative attempts to expand the Committee’s remit to the Department of Agriculture equities as well as to state laws and regulations.
- Ending PRC-related mitigation agreements as a potential option in lieu of a presidential block and replacing them with concrete actions to be completed within a specific time frame. Already a dying breed, traditional CFIUS mitigation agreements involving Chinese parties appear to be on the chopping block completely.
Outbound US Investment
The Investment Policy will build on former President Biden’s Executive Order 14105, “Addressing United States Investments in Certain National Security Technologies and Products in Countries of Concern” (see our “reverse CFIUS” outbound investment analysis), to create additional restrictions on U.S. investments in the PRC by:
- Expanding industry sectors covered by the U.S. outbound investment regulations to biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy and other areas implicated by the PRC’s Military-Civil Fusion national strategy. The Investment Policy calls for ongoing review of covered sectors, which could potentially undo some of the existing exemptions for investments in publicly traded securities and index and mutual funds, and passive limited partners.
- Supplementing outbound restrictions through the imposition of sanctions and other actions contemplated in former President Biden’s Executive Order 14105.
- Directing a review of, and the potential suspension or termination of, the 1984 United States-The People’s Republic of China Income Tax Convention, which allows parties operating in both jurisdictions to avoid double taxation and also helps prevent tax evasion.
Takeaways
Perhaps the part of the Investment Policy most likely to impact PRC investors if implemented is the document’s call for an expanded role with respect to greenfield investments. Traditionally, greenfield investments have not been subject to CFIUS jurisdiction except where such investments involve real estate proximate to sensitive facilities, but some have advocated that the CFIUS statute could cover broader actions.
When combined with the Investment Policy’s call to further restrict access to U.S. expertise and technology (which could be implemented through expanded export control regulations by the Commerce Department) in industries like AI, increased layers of restrictions will narrow already limited opportunities for PRC investment in certain key tech sectors in the U.S.
At a minimum, we expect, if implemented as described, that the Investment Policy will lead to greater diligence and related compliance obligations on both foreign and U.S. investors broadly, including increased diligence requirements with respect to all PRC ties.
It remains to be seen how the Trump administration will define “allies and partners” for purposes of CFIUS favor. Though CFIUS’ caseload will likely increase given the strengthening and expansion of CFIUS’ remit, depending on the type of investment, the approval process timeline and costs related to mitigation may decrease for favored investors.
See the Executive Briefing publication
1 The term “foreign adversaries” is defined in the Investment Policy as the People’s Republic of China (including Hong Kong and Macau; together, “PRC”), the Republic of Cuba, the Islamic Republic of Iran, the Democratic People’s Republic of Korea, the Russian Federation and the regime of Venezuelan President Nicolas Maduro.
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