USA Trends and Developments Contributed by: G. J. Ligelis Jr, Cravath, Swaine & Moore LLP
The AFI Policy stated the Trump administration’s posture on PRC investment outright, categorising the PRC as a “foreign adversary” for the purposes of the memorandum, along with the Republic of Cuba, Iran, the Democratic People’s Republic of Korea, the Rus - sian Federation and the Venezuelan regime of Nico - lás Maduro. The memorandum stated that “certain foreign adversaries, including the People’s Republic of China (PRC), systematically direct and facilitate investment in United States companies and assets to obtain cutting-edge technologies, intellectual prop - erty, and leverage in strategic industries. The PRC pursues these strategies in diverse ways, both visible and concealed, and often through partner companies or investment funds in third countries.” Under the Trump administration, it has become clear that the PRC has become a disfavoured source of foreign investment and that foreign investors with ties to the PRC will receive strict scrutiny from CFIUS. The USA will use existing tools – and pursue new legal authorities – to restrict investment from the PRC, and PRC or PRC-affiliated investors will likely face even steeper hurdles than they have in the past. Tariffs A hallmark of the second Trump administration thus far has been its willingness to use tariffs and the threat of tariffs as leverage in both economic and noneco - nomic negotiations and with both traditional allies and adversaries alike. In 2020, the North American Free Trade Agreement was replaced by the United States–Mexico–Canada Agreement (USMCA), and in July 2026, on the sixth anniversary of the USMCA’s implementation, the three countries will hold a formal review to assess its record and future. Given the ongoing tariffs – and threat of tariffs – against Canada and Mexico, the talks will like - ly be anything other than routine. In 2024, goods and services trade within North America totalled an esti - mated USD1.93 trillion, and the USMCA governs co- operation across a range of sectors, from automotive manufacturing to energy and agriculture. The Trump administration has reiterated that both Canada’s and Mexico’s access to the US market will depend not only on addressing perceived trade imbalances, but
also action on non-trade concerns, including immigra - tion and drug enforcement. The Trump administration’s tariff policies have trig - gered a range of different responses from the USA’s trading counterparties. On the one hand, they have indirectly bolstered certain alliances not involving the USA. For example, BRICS – an intergovernmen - tal organisation comprised of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Indonesia, Iran and the United Arab Emirates – has turned inward in response to American tariffs. At the annual BRICS summit in 2025, the countries issued a statement voicing “serious concerns about the rise of unilateral tariff and non-tariff measures which distort trade” and committing to increased economic and trade collabo - ration within BRICS. On the other hand, certain other countries have chosen a more conciliatory approach. In exchange for lower tariffs, Japan pledged to fund more than USD550 billion in American projects to bol - ster American infrastructure and manufacturing. Tariffs have been front and centre of the Trump admin - istration’s policymaking so far in 2025, although it remains to be seen how they will affect foreign invest - ment into the USA over the long term. Regardless, the widespread reintroduction of tariffs as a policy tool has ushered in a new chapter in American trade policy, with the effects to be seen in the years to come. Outbound FDI Regulation On the other side of the ledger, the USA was the lead - ing source of outbound FDI to other countries in 2024. US outbound FDI increased by USD206.3 billion, or roughly 3%, to USD6.8 trillion at the end of 2024 from USD6.7 trillion at the end of 2023. Large US multina - tional companies across industries, from the technol - ogy sector to the automotive industry and hospitality space, have continued to invest heavily abroad, even during the last few challenging years. However, on the regulatory front, there has been grow - ing momentum in Washington, DC, to focus on the potential national security risks of outbound FDI in addition to the more traditional scrutiny of inbound FDI through CFIUS. The AFI Policy noted a potential expansion of outbound investment by US persons in PRC-linked entities, both in terms of sector (eg, hyper -
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