The policy memo aims to preserve an open investment environment as well as restrict investment in strategic sectors.

By James H. Barker, Les P. Carnegie, Damara L. Chambers, Zachary N. Eddington, Ruchi G. Gill, and Catherine Hein

Late on Friday, February 21, 2025, the White House released its “America First Investment Policy” memorandum.

The presidential action seeks to enhance US national and economic security by directing department and agency heads to preserve an open investment environment, particularly from US allies, while protecting against predatory acquisition practices from adversaries, such as the People’s Republic of China (PRC) and others.

Three major takeaways:

1. The Trump administration will continue using the Committee on Foreign Investment in the United States (CFIUS) as a potent national security tool, including to restrict PRC-affiliated persons from investing in US strategic sectors, while simultaneously facilitating greater investment from specified allied and partner sources through a new “fast-track” process for certain reviews and the use of mitigation agreements requiring more concrete actions that companies can complete within a specified time.
2. The administration is considering further restrictions on US outbound investments, and is likely to expand Treasury’s US Outbound Investment Security Program to cover more sectors and types of transactions.
3. The administration will use all necessary legal authorities, including the imposition of additional sanctions under the International Emergency Economic Powers Act (IEEPA), to further deter US persons from investing in the PRC’s military-industrial sector.

Overall, while there are new ideas and initiatives, the policy does not appear to represent a major directional shift change in national security priorities from Trump 1.0 through to Biden and the Trump 2.0 administration. The policy and associated review of specific regulatory regimes and tools may result in tweaks to the present CFIUS regime governing US inbound foreign investment, as well as additional changes to the newly implemented outbound investment framework, but we still expect those basic frameworks will stay in place.

Below, we detail initial thoughts on the memo, covering foreign adversary definition, CFIUS, the Outbound Investment Security Program, and other initiatives and ideas.

Foreign Adversary Definition

• The memo is focused on the PRC, but also lists Cuba, Iran, North Korea, the Russian Federation, and “the regime of Venezuelan politician Nicolás Maduro” as “foreign adversaries.”

CFIUS

• The memo asserts that “America’s investment policy is critical to [US] national and economic security.” Further, it reiterates the Trump administration’s commitment to use “all necessary legal instruments, including the Committee on Foreign Investment in the United States (CFIUS), to restrict PRC-affiliated persons from investing in United States technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.” However, whether this affirmation of existing US policy will result in CFIUS actually blocking more deals than mitigating deals remains to be seen. Indeed, the Trump administration is seemingly admonishing CFIUS not to continue entering into complicated and burdensome agreements to facilitate Chinese investments into the US.
• The memo also acknowledges that, working with Congress when necessary, there may be a need to: strengthen CFIUS jurisdiction over “greenfield” investments, farmland, and real estate near sensitive facilities; further restrict foreign adversary “access to United States talent and operations in sensitive technologies (especially artificial intelligence)”; and expand the remit of “emerging and foundational” technologies addressable by CFIUS.
• While the memo takes a strong position on protecting US national security from predatory investment, it also reiterates that the US “will continue to welcome and encourage passive investments from all foreign persons, if such investments are “non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decision making, or non-public access to technologies or technical information, products, or services.” For the US to explicitly preserve this baseline, even for investors into sensitive sectors, could be a useful stabilizing signal to foreign investors.
• Significantly, the memo critiques the current CFIUS approach to mitigation agreements, which typically include long-term, open-ended obligations that can require extensive government oversight. The memo directs that mitigation agreements should instead consist of “concrete actions that companies can complete within a specific time, rather than perpetual and expensive compliance obligations.” This approach could result in more prohibition and less mitigation for matters that present significant national security risk, and could also involve countries that the US views as adversaries. Some of the discussion targeting mitigation is framed around the expense of mitigating “investments from foreign adversary countries,” but the Trump administration’s views of CFIUS mitigation may extend generally to more streamlined mitigation for investors from US partners and allies.
• Moreover, the memo directs the creation of an “expedited ‘fast-track’ process for specified allied and partner sources in US businesses involved with advanced technology and other important areas,” subject to security assurances, including requirements that the specified investors avoid partnering with US foreign adversaries.
• The memo does not detail how the new fast-track process will work or precisely who could benefit from it, but this could be a welcome alternative to the short-form declaration process that seems to be growing longer, with pre-filing questions imposed by CFIUS and frequent requests to file a full notice following a declaration filing.

 Outbound Investment Security Program

• From the standpoint of the Outbound Investment Security Program — implemented at the end of the Biden administration early this year — PRC-affiliated companies could see impacts from a capital raising perspective if the rules are tightened and their aperture is widened to include an increasing number of sensitive industries and types of investments.
• Indeed, the memo observes that PRC companies “raise capital by: selling to American investors securities that trade on American and foreign public exchanges; lobbying United States index providers and funds to include these securities in market offerings; and engaging in other acts to ensure access to United States capital and accompanying intangible benefits.” For example, if the current Outbound Investment Program is modified to remove exceptions for investment in certain publicly traded securities or limited partnerships, it could impede PRC-affiliated companies’ ability to raise capital and impose a significant additional compliance burden on US investment firms, financial institutions, and individuals.
• The memo previews that the administration will consider new or expanded restrictions on US investment in the PRC in sectors such as “semiconductors, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy,” and directs that “[c]overed sectors should be reviewed and updated regularly, including by the Office of Science and Technology Policy.” The expansion of such restrictions could further exacerbate the financial impacts and compliance burdens associated with additional changes to the Outbound Investment Program. At the same time, the memo suggests that the Trump administration may also examine the outbound investment implementing regulations and may consider modifications to how the program is implemented. Indeed, the Trump administration directed the US Secretary of the Treasury to execute the latter in the America First Trade Policy issued on January 20, 2025.

Other Initiatives and Ideas

• The memo considers suspending or terminating the 1984 United States-The People’s Republic of China Income Tax Convention, which it asserts is partly responsible for the “deindustrialization of the United States and the technological modernization of the PRC military.”
• The memo states that the US will use “all necessary legal instruments to further deter United States persons from investing in the PRC’s military-industrial sector,” including imposing additional sanctions under IEEPA.
• The memo calls for various forms of scrutiny of the structures, legal, and accounting compliance of public foreign adversary companies listed on US domestic exchanges.
• The memo pledges that the administration will expedite environmental reviews for any investment in the US of more than US$1 billion.

In short, the Trump administration will likely look to make certain modifications to both the CFIUS and Outbound Investment regimes, and will continue to leverage additional tools to protect US national security.