On Feb. 21, 2025, President Trump issued a National Security Presidential Memorandum (NSPM) introducing an “America First Investment Policy,” which sets the stage for a significant realignment of U.S. investment regulations. The policy seeks to promote foreign investment from U.S. allies while imposing stricter controls on adversarial nations, particularly the People’s Republic of China (PRC). The directive frames economic security as a core component of national security, emphasizing the need to shield key U.S. industries from foreign exploitation while preserving an open investment environment for trusted partners. Although the policy focuses heavily on China’s influence over U.S. capital markets and critical supply chains, it also applies to other designated foreign adversaries, including Russia, Iran, North Korea, Cuba and Venezuela’s Maduro regime.
Rather than imposing immediate regulatory changes, the NSPM directs federal agencies—primarily the U.S. Department of the Treasury, in coordination with other executive departments—to develop new rules and enforcement mechanisms to implement its objectives. These initiatives expand upon existing national security tools, including the Committee on Foreign Investment in the United States (CFIUS) and the Outbound Investment Security Program established under Executive Order 14105 (the Outbound Order). The NSPM outlines a framework for restricting PRC-linked investments in U.S. industries, expanding limitations on outbound U.S. capital flows and expediting investment approvals for allied nations. Although further regulatory action will be required to operationalize these initiatives the directive reinforces a U.S. investment policy aimed at countering economic threats from foreign adversaries. (For more details, see the administration’s fact sheet.)
Expanded Restrictions on Foreign Investment into the United States
The NSPM establishes a comprehensive framework to block PRC-affiliated investments in U.S. strategic sectors. While CFIUS has historically reviewed Chinese investments on a case-by-case basis, the directive aims to broaden restrictions across multiple industries by:
- Blocking PRC-affiliated acquisitions of critical U.S. infrastructure, technology, energy and agriculture assets through expanded CFIUS authority.
- Extending CFIUS jurisdiction to cover greenfield investments, ensuring that Chinese firms cannot establish new U.S. businesses that could later integrate into sensitive supply chains.
- Enhancing oversight of real estate transactions, particularly those involving farmland and properties near military installations or other sensitive government sites. Relatedly, U.S. lawmakers are expected to reintroduce legislation this Congress that would broaden CFIUS oversight regarding Chinese purchases of U.S. farmland and ban PRC investments in land adjacent to federal property, potentially building on the Trump administration’s NSPM.
While statutory amendments may be required to fully implement certain provisions—such as restricting greenfield investments—the NSPM signals a shift toward a more categorical approach in rejecting Chinese investments. Additionally, the use of the International Emergency Economic Powers Act (IEEPA) remains an option for enacting broader prohibitions without congressional action.
Another key aspect of the NSPM is the restructuring of CFIUS mitigation agreements. Historically, these agreements have imposed long-term, costly compliance obligations on foreign investors. Under the new policy, the administration intends to reduce reliance on complex mitigation agreements, favoring outright prohibitions on high-risk transactions and streamlining compliance requirements for investments from trusted allies.
Heightened Scrutiny on U.S. Outbound Investment
The NSPM reinforces and expands the Outbound Investment Security Program established under the Outbound Order (Executive Order 14105), which took effect on Jan. 2, 2025. That program currently prohibits or requires notification for certain U.S. outbound investments in China’s semiconductor, quantum computing and artificial intelligence (AI) sectors. You can find Brownstein’s analysis of the Outbound Order here. However, the NSPM suggests that these restrictions may not go far enough and outlines additional measures to curtail U.S. financial exposure to China’s Military-Civil Fusion strategy.
The policy calls for expanded outbound investment restrictions in:
- Greenfield investments and corporate expansions in China.
- Private equity, venture capital and public market transactions involving Chinese firms.
- Pension funds, university endowments and other institutional investments with exposure to Chinese strategic industries.
Additionally, the administration is reviewing the 1984 U.S.-China Income Tax Treaty, signaling a potential move to terminate tax advantages that facilitate U.S. capital flows into China. This aligns with broader efforts to decouple U.S. financial markets from Chinese entities, limiting Beijing’s ability to leverage American capital for technological and military development.
The NSPM also directs agencies to strengthen financial auditing standards for Chinese firms listed on U.S. exchanges and increase scrutiny on investment structures such as variable interest entities (VIEs), which allow Chinese companies to bypass foreign ownership restrictions. These measures are expected to further deter U.S. investors from funding PRC-linked entities.
Facilitating Investment from U.S. Allies and Partners
While the NSPM imposes significant new restrictions on adversarial investment, it simultaneously seeks to encourage capital inflows from U.S. allies. A key provision of the policy introduces a fast-track investment process designed to accelerate approvals for trusted investors from allied nations.
However, implementation challenges remain. CFIUS already provides for relatively expedited review procedures, and introducing a new “fast-track” mechanism may require legislative action or regulatory adjustments to establish clearer preclearance frameworks for eligible investors. The NSPM could also lead to an expansion of the “excepted investor” framework under the Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018, potentially broadening the list of exempted allied nations beyond the current scope, which is limited to Australia, Canada, New Zealand and the United Kingdom.
While details remain uncertain, the NSPM signals that investment from allied countries will face reduced regulatory hurdles, in contrast to the heightened oversight imposed on PRC-linked transactions.
Next Steps
The Trump administration’s “America First Investment Policy,” as outlined in the NSPM, marks a major shift in U.S. foreign investment regulations, particularly for allied investors seeking to engage in U.S. strategic sectors. With the planned expedited fast-track process for trusted investors, there will be new opportunities for qualifying foreign entities to invest in advanced technology, critical infrastructure and other high-priority industries while avoiding the heightened scrutiny applied to adversarial transactions. However, navigating these evolving regulatory pathways will require a clear understanding of eligibility criteria, preclearance mechanisms and compliance requirements as federal agencies implement the NSPM’s directives.
