Trump Administration Directs CFIUS to Tighten Restrictions on Investment From Certain Countries While Easing National Security Reviews of Investments From Allies and Partners

By: Guillermo S. Christensen, Steven F. Hill, Brian J. Hopkins, Dave R. Allman, Nate B. Bolin, and Jeffrey Orenstein

On 21 February 2025, President Donald J. Trump issued the America First Investment Policy, directing the Committee on Foreign Investment in the United States (CFIUS) to adjust its approach to foreign investments. This policy aims to facilitate investments from allied nations while imposing stricter reviews on investments from adversarial countries, particularly China.

Facilitating Investments from Allies

The policy introduces a fast-track process for investors from key partner countries, which are yet to be identified. This initiative seeks to promote economic growth and innovation in the US by simplifying the investment process for allies. Historically, the Excepted Investor provision in CFIUS regulations offered limited relief, but its narrow scope and complexity have posed challenges. The new policy aims to provide clearer guidelines, distinguishing between genuine national security threats and low-risk investments.

To prevent potential security risks, the fast-track process includes safeguards against collaborations between approved investors and entities from adversarial nations. For example, companies engaged in significant joint ventures or research operations in China, especially those that could benefit the Chinese military, may be excluded from expedited treatment.

Additionally, the policy allocates more administrative resources to support investments from key partners, aiming to reduce bureaucratic hurdles and avoid complex, open-ended mitigation agreements. Environmental reviews for investments exceeding US$1 billion will also be expedited, further streamlining the process.

Encouraging Passive Investments

The policy signals a shift in CFIUS’s stance toward passive investments, particularly those from China without evident government ties. Over the past four years, such investments have faced increasing scrutiny. The new directive encourages passive investments from all foreign entities, potentially broadening capital access for US companies.

Enhanced Scrutiny of Chinese Investments

Conversely, the policy mandates stricter reviews of investments from adversarial nations, with a pronounced focus on China. CFIUS is instructed to implement new rules to prevent the exploitation of US capital, technology, and expertise by foreign adversaries. This includes considering expanded restrictions on US outbound investments to China in sensitive sectors such as semiconductors, artificial intelligence, quantum computing, biotechnology, and aerospace. The objective is to prevent US resources from supporting China’s military modernization and intelligence operations.

Implications and Reactions

Overall, the policy signals a shift in US policy to favor investments from allied and other non adversarial nations, especially the “NATO plus” countries. Such investments could benefit from fast-track review process as well as increased scrutiny of China and other countries considered by CFIUS to be of concern. However, such investors may still attract scrutiny if they maintain significant commercial operations in China, especially those in the critical technologies space. Rulemaking to implement the policy may be crafted in such a way to discourage friendly country investors from continuing significant operations in China.

A more comprehensive analysis of the new policy can be found here.