United States Treasury Department

Potential policy changes could offer opportunities for CFIUS filers in low-risk transactions while introducing added challenges for transaction parties linked to sensitive countries.

By James Barker, Les Carnegie, Damara Chambers, Paul Rosen, Zachary Eddington, Ruchi Gill, and Catherine Hein

On April 24, 2025, Deputy Secretary of the Treasury Michael Faulkender spoke on the Committee on Foreign Investment in the United States (CFIUS) and the Outbound Investment Security Program at the American Conference Institute’s annual CFIUS conference. Mr. Faulkender, a finance professor at the University of Maryland who was the Assistant Secretary of the Treasury for Economic Policy in the first Trump administration, was confirmed for his current position on March 26, 2025.

Mr. Faulkender’s remarks addressed aspects of the White House’s America First Investment Policy, which was issued on February 21, 2025, and discussed in another blog post. He confirmed the Trump administration is moving forward with some aspects of the policy, which could affect parties to transactions related to CFIUS or the Outbound Investment Security Program.

CFIUS

  • Fast-Track Process: Mr. Faulkender explained that the administration is developing a “fast-track” process “to facilitate greater investment in U.S. businesses from ally and partner sources,” as contemplated by the America First Investment Policy. While noting this process is still in the early stages, he said two components of the fast-track process may be (1) working with repeat CFIUS filers to develop “a knowledge base that limits the amount of information that needs to be resubmitted with each new filing” and (2) “looking at ways we can share more information with the public about the types of risks that arise in certain transactions, as well as best practices parties can use to limit these risks prior to CFIUS review.” While time will tell what is meant by “fast-track,” Mr. Faulkender’s remarks suggest it will focus on increased efficiencies and process improvements. Indeed, without legislation or a substantial amendment to the excepted foreign state regulations, an expedited process likely will focus on these types of improvements. Meanwhile, CFIUS staff has redoubled efforts in the last several years to engage with members of the CFIUS bar and with industry at conferences and in other fora; continuing that engagement will help filers better understand the policies and priorities of the new administration.
  • Streamlining Mitigation: Mr. Faulkender said the administration will attempt “to appropriately streamline CFIUS mitigation to make sure that we are not using mitigation measures that are overly bureaucratic, complex, and open-ended.” This statement mirrors language from the America First Investment Policy indicating the “Administration will cease the use of overly bureaucratic, complex, and open-ended ‘mitigation’ agreements for United States investments from foreign adversary countries.” This effort may present some opportunities for parties to transactions involving foreign investors from ally and partner countries to obtain more favorable mitigation terms, or to terminate outdated existing mitigation agreements. It also suggests CFIUS may move to block more transactions involving foreign investors from China or other sensitive countries instead of clearing them with mitigation.
  • Focus on Connections to China: Mr. Faulkender stated that a foreign investor’s “distance and independence from foreign adversaries—and being able to verify this—is a core component of CFIUS’s risk analysis,” mirroring similar language from the America First Investment Policy. This likely means that CFIUS will continue to scrutinize foreign investors’ connections to China and other sensitive countries, and particularly in the context of considering fast-track.
  • Passive Investments: Mr. Faulkender observed that “passive investment from all foreign persons enables the flow of capital into U.S. businesses without creating the kind of national security risks that CFIUS was designed to address.” This position is consistent with how the America First Investment Policy confirmed that “[t]he United States will continue to welcome and encourage passive investments from all foreign persons.” This suggests that CFIUS will continue to generally lack jurisdiction over entirely passive investments, and the new administration seems eager to attract significant amounts of that very same low-risk, passive investment.

Outbound Investment Security Program

  • Potential Scope Expansion: Mr. Faulkender noted that the administration will “continue to evaluate whether the program is appropriately scoped to be responsive to developments in technology and the strategies of countries of concern.” The America First Investment Policy suggested the program could be expanded to address additional technology areas such as “biotechnology, hypersonics, aerospace, advanced manufacturing, [and] directed energy” as well as more types of transactions. Mr. Faulkender’s comments indicate that the administration may be continuing to consider this expansion. He also indicated that Treasury has begun to receive notifications under the new program, which went live earlier this year. Our takeaway is that some form of outbound investment review is here to stay, and probably getting more expansive.

In short, although the potential changes discussed in Mr. Faulkender’s speech would not represent major shifts in the current CFIUS process or the Outbound Investment Security Program, they may provide opportunities for parties in low-risk CFIUS cases while creating new challenges for parties to transactions with connections to China or other sensitive countries.

Latham & Watkins will continue to monitor and provide updates on developments in these areas.