USA Trends and Developments Contributed by: G. J. Ligelis Jr, Cravath, Swaine & Moore LLP
sonics, aerospace, advanced manufacturing, directed energy and more) and type of investment (eg, invest - ments in publicly traded securities). In October 2024, the US Treasury Department released its final regulations implementing an outbound invest - ment control regime to restrict American investment in the PRC. Effective 2 January 2025, the rule impacts US companies and citizens who invest in certain PRC or PRC-linked businesses. It specifically targets trans - actions involving quantum information technologies, semiconductors and microelectronics, and artificial intelligence. Some of these transactions, such as those involving quantum information technologies, are prohibited outright, while others require a mandatory notification to the Treasury Department within 30 days of closing. As a result, those individuals and entities that decide to invest in certain Chinese businesses may experience increased due diligence requirements and compliance risks. Additionally, bills regulating outbound FDI and the export of certain technologies abroad continue to be brought to Congress. The China Technology Transfer Act of 2025 would restrict the export to the PRC of certain “national interest technology” and intellectual property, and the No Advanced Chips for the CCP Act of 2025 would prevent advanced artificial intelligence semiconductors from being sent to the PRC without both the President and Congress explicitly approv - ing such transactions. In October 2025, the Sen - ate passed a bipartisan amendment to the National Defense Authorization Act that would allow the US government to block investments into certain technol - ogy sectors of the Chinese economy.
Proponents of the bills argue that US companies investing in technology development overseas can increase the capabilities of US competitors and adver - saries, thereby creating national security risks equiva - lent to those that may result from non-US companies acquiring US-based businesses. Conclusion It remains as difficult as ever to gaze into the crystal ball and predict whether the USA will retain its top spot for both inbound and outbound FDI flows in 2026 and beyond. The key variable will be the extent of the impact of the Trump administration’s ushering in of a new chapter in the United States’ approach to FDI and its relationships with trading partners, encompassing the use of tariffs, the expansion of industrial policy, and wider geopolitical developments.
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