USA Trends and Developments Contributed by: G. J. Ligelis Jr, Cravath, Swaine & Moore LLP
Overview In 2024 and the first half of 2025, the USA was the leading destination for inbound foreign direct invest - ment (FDI) as well as the largest investor in outbound FDI worldwide, according to the OECD. The USA also topped the list in Kearney’s Foreign Direct Investment Confidence Index as the most attractive market for FDI for the thirteenth year in a row. Perhaps this is just concomitant with the USA being the largest economy in the world. Perhaps it reflects the flight of FDI flows to a historically more stable and predictable jurisdiction in times of uncertainty in recent years. Perhaps it can be attributed to the simple good fortune of having access to abundant energy sources, being geographically removed from geopolitical strife, and dynamic and durable consumer spending. Amidst a complex and changing political, economic and social backdrop, a number of factors have influ - enced the USA’s position as a top destination for FDI again in 2025, including legislative and executive action with direct implications for FDI. America First Investment Policy On 21 February 2025, the White House issued the National Security Presidential Memorandum 3: Amer - ica First Investment Policy (the “AFI Policy”). The AFI Policy notes that the Trump administration remains committed to the USA’s longstanding, bipartisan open investment environment, but also previews significant potential changes to foreign investment regulation. Those potential changes include: • proposed expansion of jurisdiction of the Com - mittee on Foreign Investment in the United States (CFIUS) to include “greenfield” investments (ie, investments in which a foreign person establishes a new business in the USA, rather than acquiring or investing in an existing US business); • a focus on reforming CFIUS mitigation agree - ments so that such agreements consist of concrete actions that companies can complete within a specific time, rather than perpetual and expensive compliance obligations; • expedited environmental reviews for investments in the USA over USD1 billion;
• further restrictions on investment by the People’s Republic of China (the “PRC”) or PRC-affiliated persons in US businesses in strategic sectors, including critical technology, critical infrastructure, healthcare, agriculture, energy and raw materials; and • the AFI Policy “welcomes and encourages passive investments from all foreign persons”, including non-controlling stakes and shares with no vot - ing, board or other governance rights and that do not confer any managerial influence, substantive decision-making or non-public access to technolo - gies/technical information, products or services. The AFI Policy is significant because it highlights the Trump administration’s key considerations relat - ing to foreign direct investment and its attitude that economic security is national security. Specifically, it prioritises protecting US companies in critical sectors, revitalising US manufacturing capacity, building US capabilities in new technologies and ensuring supply chain resilience. CFIUS and National Security While CFIUS has been around for many years, the passage of the Foreign Investment Risk Review Mod - ernization Act in 2018 and its implementation since adoption expanded the scope of transactions sub - ject to review, required certain mandatory filings for the first time and enhanced the focus on transactions involving critical technologies, critical infrastructure and sensitive personal data. Using this broadened grant of authority, CFIUS reviewed 325 total filings made by transaction par - ties in 2024, down from a total of 342 filings in 2023 and 440 filings in 2022. This change may reflect lower global M&A volume but also greater sophistication of parties in discerning which transactions may require a notice to be filed and greater comfort in not filing for transactions that involve little national security risk. In 2024, CFIUS imposed five civil monetary penalties for violations – four with respect to breaches of mate - rial provisions of mitigation agreements or conditions, and one with respect to submission of a notice and supplemental information containing material mis - statements. These penalties were significant as, prior
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