On February 21, 2025, the US government issued the “America First Investment Policy” memorandum and accompanying fact sheet outlining the principles and objectives of the Trump administration’s investment policy. The memorandum focuses on the prioritization of investments from allies and partners, including those with “tremendous sovereign wealth funds,” and the particular threats posed by foreign adversaries, including China, Hong Kong, Macau, Cuba, Iran, North Korea, Russia and the regime of Venezuelan politician Nicolás Maduro. The memorandum specifically directs the Committee on Foreign Investment in the United States (“CFIUS”) to restrict investments from China in certain strategic sectors, and previews new or expanded restrictions on certain US outbound investment in China. The focus on China is consistent with policies of the prior administration, as reflected in our prior blog posts here, here, and here.
The key announcements include the following:
- Fast-track process for allies and partners: The United States will create a “fast-track” process to facilitate greater investment from specified allies and partners in US businesses involved in US advanced technology and other strategic sectors. The fast-track process would allow for increased foreign investment subject to certain security provisions, including requirements that specified allies and partners avoid partnering with US foreign adversaries (including China).
- Expedited environmental reviews: The United States will offer expedited environmental reviews for investments over $1 billion in the United States.
- Restricting foreign adversary investments: The United States will direct CFIUS to restrict Chinese investments in strategic US sectors, such as technology, critical infrastructure, healthcare, agriculture, energy, raw materials and others.
- Potential expansion of CFIUS jurisdiction: The United States will seek, including in consultation with Congress, to strengthen CFIUS’ authority over “greenfield” investments (beyond its existing authority to review greenfield investments involving real estate located in close proximity to certain US sensitive facilities), to protect US farmland and real estate near sensitive facilities, to restrict access to US talent and operations in sensitive technologies (especially artificial intelligence) from foreign adversaries, and to expand the scope of “emerging and foundational” technologies addressable by CFIUS.
- Reducing the use of mitigation agreements: The United States will cease the use of “overly bureaucratic, complex, and open-ended” mitigation agreements, and will more sparingly use mitigation agreements for concrete actions that companies can complete within a specified time. This marks a shift in the Biden administration’s broad use of mitigation agreements, which amounted to approximately 20% of CFIUS filings in 2023.
- Encouraging passive investments: Passive investments from all foreign persons will continue to be welcomed in the United States. This includes noncontrolling stakes and shares with no voting, board, or other governance rights and investments that do not result in any managerial influence, substantive decisionmaking, or non-public access to technologies or technical information, products, or services.
- Additional outbound investment restrictions: The United States will consider new or expanded restrictions on US outbound investment in China in sensitive technologies, including semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by China’s military-industrial sector. The United States will also consider applying restrictions on pension funds, university endowments, and other limited-partner investors involved in certain investment types (e.g., private equity, venture capital, greenfield investments, corporate expansions, and investments in publicly traded securities), thus making it more difficult for foreign adversaries (including China) to tap US capital markets. The United States is evaluating whether Executive Order 14015 (i.e., the underlying authority of the US outbound investment regime) includes sufficient controls to address national security threats.
- Proposed withdrawal from the Tax Treaty: Finally, the United States will consider suspending or terminating the 1984 United States-The People’s Republic of China Income Tax Convention, which seeks to avoid double taxation and the prevention of tax evasion between the United States and China. Withdrawal from this tax treaty would effectively make investments in China more expensive for US taxpayers, thereby seeking to discourage cross-border business activities.
The memorandum calls on the Secretary of the Treasury, in consultation with the Secretary of State, the Secretary of Defense, the Secretary of Commerce, the United States Trade Representative, and the heads of other executive departments and agencies to implement the policies outlined in the memorandum. At this time, there is no timeline proposed for the implementation of the above policies.
