At a Glance
- On February 21, 2025, the Trump administration (the Administration) issued the “America First Investment Policy” memorandum (the Policy), which outlines several significant changes in approach to both foreign investment in the United States and outbound investment.
- The Policy orders several changes and introduces various measures related to reviews of transactions by the Committee on Foreign Investment in the United States (CFIUS) and U.S. Department of the Treasury (Treasury) under its new Outbound Investment Security Program.
- The Policy includes: (i) a fast-track foreign investment process for friendly countries; (ii) a more limited use of CFIUS mitigation agreements; (iii) new restrictions on outbound investment that could include the use of sanctions to deter investment in certain sectors in the People’s Republic of China (PRC); (iv) expanding outbound investment restrictions to also cover the biotechnology, aerospace, advanced manufacturing, and direct energy sectors; and (v) a required submission from the Department of Justice about risks posed by “foreign adversary companies” listed on U.S. exchanges.
Below is a summary of some of the measures identified in the Policy, and some suggestions for what foreign and domestic investors should be considering as this goes into effect.
Summary of the Policy
The Policy, which was issued as a National Security Policy Memorandum (NSPM), makes several significant changes related to both foreign investment and outbound investment activity.
Foreign Investment in the United States
“Fast Track” Review
The Administration will create an expedited “fast-track” process for “specified allied and partner sources” with certain security provisions (e.g., no partners with U.S. foreign adversaries1) to facilitate greater investment from certain allies in U.S. businesses “involved with U.S. advanced technology and other important areas.”
A Focus on New Sectors, Protection for Certain U.S. Farmland and Real Estate, and Strengthening CFIUS Authority
In addition to sectors that are traditionally the focus of CFIUS reviews (e.g., critical technology, critical infrastructure, health care, energy, etc.), the Administration will use necessary legal instructions, including CFIUS review, to restrict PRC-affiliated persons from investment in U.S. agriculture, raw materials, and other strategic sectors. In Section 2(f), President Trump also states that the United States will protect U.S. farmland and real estate near sensitive facilities. Under Section 2(f) of the Policy, the Administration will also seek, in consultation with Congress: (i) to strengthen CFIUS’s authority over “greenfield” investments, to restrict foreign adversaries’ access to U.S. talent and operations in sensitive technologies, such as artificial intelligence; and (ii) to expand the “emerging and foundational” technologies addressable by CFIUS.
Decrease in Mitigation Agreement Usage
Under Section 2(g) of the Policy, the Administration will cease the use of “overly bureaucratic, complex, and open-ended ‘mitigation’ agreements” for U.S. investments from foreign adversary countries. In an effort to reduce administrative burden and resources, President Trump indicates that generally mitigation agreements should consist of concrete actions that companies can complete within a specific time, rather than perpetual and expensive compliance obligations.
Identifying Risks Posed by Foreign Companies on Domestic Exchanges
The Policy directs the U.S. Attorney General and the Director of the Federal Bureau of Investigation to provide a “written recommendation” on the risks posed to U.S. investors for “all foreign adversary companies currently listed on domestic exchanges.” The Policy does not specify whether that recommendation, or any identification of “foreign adversary companies” found to be a “risk” will be made public.
Expedited Reviews for Certain Investments in the Environmental Sector
The Administration will also expedite environmental reviews for any investment over $1 billion in the United States.
Welcoming Passive Foreign Investment
The United States will continue to welcome and encourage certain passive investments from foreign persons, which is consistent with exceptions under current CFIUS regulations.
Outbound Investment
New Rules for Outbound Investment Involving the PRC’s National Military-Civil Fusion Strategy
Under Section 2(e) of the Policy, the United States will establish new rules to stop U.S. persons from investing in industries that advance the PRC’s national military-civil fusion strategy and stop PRC-affiliated persons from “buying up critical American businesses and assets.” The Policy does not specify whether these rules will be promulgated under regulations administered by Treasury under its Outbound Investment Security Program or the Office of Foreign Assets Control (OFAC).
Potential Use of Economic Sanctions for Outbound Investment in the PRC’s Military-Industrial Sector
Under Section 2(i) of the Policy, to deter U.S. investment in PRC’s military-industrial sector, the United States may: (i) impose blocking sanctions under the International Emergency Economic Powers Act, the foundational authority for most U.S. economic sanctions programs that are administered by OFAC; (ii) impose more targeted sanctions, such as those under the Chinese Military-Industrial Complex Sanctions Regulations that prohibit U.S. persons from purchasing or selling publicly traded securities of designated Chinese companies operating in the defense or surveillance technology sectors of China; or (iii) impose penalties under Treasury’s new Outbound Investment Security Program.
Outbound Investment Restrictions May Expand to the Biotechnology, Aerospace, Advanced Manufacturing, and Directed Energy Sectors
Under Section 2(j) of the Policy, in addition to current restrictions on the semiconductors, artificial intelligence and quantum sectors, the U.S. government will consider new or expanded restrictions on U.S. outbound investment in the PRC in sectors such as biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national military-civil fusion strategy.
Moreover, the Administration will consider applying restrictions on investments from sources such as pension funds and university endowments, as President Trump indicated that American universities “should stop supporting foreign adversaries with their investment decisions” and “granting university access to supporters of terrorism.”
Takeaways for Foreign and Domestic Investors
The Policy presents several new risks and opportunities for both foreign and domestic investors. Consider the following measures in response to the Policy:
Review Investment Portfolios
As an initial step, assess current and planned foreign investments (or U.S. investments if you are a foreign-based investor), particularly those involving countries that have been singled out as “foreign adversaries” (such as the PRC), and investments in critical sectors (such as advanced technology and AI) to determine whether this Policy is likely to impact your investment activity.
Prepare for Changes in the CFIUS Review Process
The Policy provides some potentially beneficial changes to certain foreign persons investing in the United States. In particular, both the “fast-track” process and the more limited and discrete use of mitigation agreements may help streamline what is often a challenging and time-consuming review process. Track the implementation of these directives and be prepared to seek their application when appropriate.
Limit the Possibility That You Will Be Identified as a “Risk” by the Attorney General
A foreign company that is identified as a “risk” in the above-described “written recommendations” by the U.S. Attorney General and the FBI Director will likely confront significant business challenges as a result of such identification. Foreign companies should review the same factors identified in the Policy — “auditability, corporate oversight and evidence of criminal or civil fraudulent behavior” — and mitigate any risks created.
Engage Legal Counsel
CFIUS, OFAC, the Outbound Investment Security Program, and the other national security regulatory and criminal programs implicated by the Policy are complex and require experienced skill. Consider engaging legal counsel with appropriate experience in these areas.
