The Trump Administration’s America First Investment Policy Memorandum: Five Key Takeaways

The Trump administration outlined its approach to foreign investment controls in a new memorandum titled “America First Investment Policy” (the Memorandum), issued on February 21, 2025. In short, the administration proposes to retool U.S. inbound and outbound investment screening to make investment into and by U.S. allies easier while making investment into or by the People’s Republic of China (PRC) and other U.S. adversaries more difficult. The Memorandum does not itself impose new regulatory requirements. Instead, it directs several agencies to begin rulemaking procedures to implement its directives, and those rulemaking processes would result in binding regulations.

The approach outlined in the Memorandum comes as no surprise. The Trump administration promised to review the recently enacted outbound investment regulations in its January 20 “America First Trade Policy” memorandum. More broadly, the Trump team has long signaled its intent to use investment policy to decouple from the PRC.

Nonetheless, the Memorandum offers valuable insight into the specific details of the reforms the Trump administration plans to pursue. Our key takeaways are below.

Key Takeaways

1. Inbound investment from allies will be easier, but there will be strings attached.

The Memorandum declares that investments from allies and partners (including their sovereign wealth funds) “supports the national interest” and that resources will “will be directed toward facilitating investments from key partner countries.”

• Conditional fast-track review for allies. The more favorable treatment for allies will come with an expectation or requirement that the investors limit their ties to foreign adversaries. Investment restrictions “will ease in proportion to their verifiable distance and independence from the predatory investment and technology-acquisition practices of the PRC and other foreign adversaries or threat actors.” Investments from “specified allied and partner sources” will be subjected to an “expedited ‘fast-track’ process.” The Memorandum does not explain what that fast-track process will look like except to note that “such treatment will come with the condition of “avoid[ing] partnering with United States foreign adversaries.” The new fast-track process will presumably be set up under the auspices of the Committee on Foreign Investment in the United States (CFIUS), but the Memorandum does not expressly tie it to CFIUS, so it is possible that other regulatory regimes will also be streamlined.
• Mitigation agreements. The Memorandum implies that CFIUS mitigation agreements in connection with investments from allied countries should be less burdensome in that they should contain specific mitigating actions and should be time limited. The use of “overly bureaucratic, complex, and open-ended” mitigation agreements “will cease.”

2. Inbound investment from foreign adversaries will be more difficult.

The Memorandum promises to modify the CFIUS process to further restrict inbound investment by investors from “foreign adversaries,” including the PRC, Hong Kong, Macau, Cuba, Iran, North Korea, Russia, and “the regime of Venezuelan politician Nicolás Maduro.”

• Restrictions on PRC investment in key U.S. industries. The Memorandum states that there will be “new rules to stop … PRC-affiliated persons from buying up critical American businesses and assets, allowing only those investments that serve American interests.” For example, CFIUS will be used to “restrict PRC-affiliated persons from investing in United States technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors.” Of course, CFIUS is already focused on these issues, so what precisely will change is unclear but for the points listed below.
• Greenfield investments and real estate. The Memorandum points to expanded CFIUS jurisdiction with respect to greenfield investments as well as new CFIUS authority (or enforcement actions) with respect to U.S. farmland and real estate near sensitive facilities. No further detail is provided.
• Emerging and foundational technologies. The Memorandum suggests that CFIUS will be used to “restrict foreign adversary access to United States talent and operations in sensitive technologies (especially artificial intelligence)” and that the administration will “expand the remit of ‘emerging and foundational’ technologies addressable by CFIUS.” At a minimum, this appears to mean that new technologies will be deemed to be “emerging and foundational technologies,” which might result in more transactions being subject to mandatory CFIUS filings. How this change may spill over into other regulatory regimes, most notably export controls, is unclear. It is also not clear if the administration intends to expand CFIUS jurisdiction to, for example, certain kinds of noninvestment relationships (such as technology transfer or commercial cooperation agreements) that are outside the current scope of CFIUS jurisdiction.
• Blocking rather than mitigating. The Memorandum appears to favor using CFIUS to block investments from adversary countries rather than trying to negotiate mitigation agreements that would allow a transaction to proceed.

3. Outbound investment in foreign adversaries will be more difficult.

The Biden administration promulgated new regulations restricting “outbound” investment by U.S. persons into certain Chinese-affiliated companies in the semiconductor and microelectronics, quantum information technology, and artificial intelligence sectors that entered into force on January 2, 2025 (Sidley update here). The new Memorandum promises a review of the existing outbound investment regulations, in line with the President’s January 20, 2025, America First Trade Policy Memorandum, and signals that the Trump administration will revise and expand them to further restrict investment by U.S. persons in U.S. adversaries.

• New sectors. The Memorandum suggests that the scope of the outbound investment regulations could be expanded to cover new technologies in the “semiconductor, artificial intelligence, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, directed energy, and other areas implicated by the PRC’s national Military-Civil Fusion strategy.”
• Narrower exceptions. The Memorandum indicates that certain types of investments that are carved out of the existing outbound investment regulations may be covered in the future. The Memorandum raises general concerns about Chinese companies raising capital by “selling to American investors securities that trade on American and foreign public exchanges; lobbying United States index providers and funds to include these securities in market offerings; and engaging in other acts to ensure access to United States capital and accompanying intangible benefits.” The Memorandum states that restrictions may extend to “private equity, venture capital, greenfield investments, corporate expansions, and investments in publicly traded securities, from sources including pension funds, university endowments, and other limited-partner investors.” Some of these categories are already covered by the outbound investment regulations, but others are not — such as passive acquisition of publicly traded securities on public markets or limited partner investments in U.S. funds. Some of these exceptions may be eliminated.
• Chinese Military-Civil Fusion. The Memorandum states that there will be “new rules to stop United States companies and investors from investing in industries that advance the PRC’s national Military-Civil Fusion strategy” and more generally that the United States will “use all necessary legal instruments to further deter United States persons from investing in the PRC’s military-industrial sector.” These instruments include sanctions authorities, restrictions on outbound investment, restrictions on holdings securities in certain designated Chinese companies, and other tools. Technologies covered by China’s Military-Civil Fusion strategy include quantum computing, big data, semiconductors, 5G, advanced nuclear technology, aerospace technology, and artificial intelligence.

4. Certain kinds of investments from any country will be easier.

• Expedited environmental reviews. The Memorandum indicates that the “Administration will … expedite environmental reviews for any investment over $1 billion in the United States.”
• Passive investments. The Memorandum states that the United States “will continue to welcome and encourage passive investments from all foreign persons.” Interestingly, the Memorandum does not exclude passive investments from foreign adversaries. The Memorandum defines “passive investments” to include the acquisition of “non-controlling stakes and shares with no voting, board, or other governance rights and that do not confer any managerial influence, substantive decisionmaking, or non-public access to technologies or technical information, products, or services.”

5. The administration will consider other trade and tax policy actions consistent with the above approach.

• U.S.-China tax cooperation. The administration will consider suspending or terminating the 1984 United States-PRC Income Tax Convention.
• Permanent Normal Trade Relations with China. The Memorandum does not expressly indicate that Permanent Normal Trade Relations (PNTR) for China will be revoked, but this step is strongly implied. The Memorandum identifies the tax treaty, “the PRC’s admission to the World Trade Organization,” and the granting of PNTR to China as factors leading “to the deindustrialization of the United States and the technological modernization of the PRC military.” The Memorandum then states that “[w]e will seek to reverse both those trends.”
• Additional actions. The administration will also
  • “determine if adequate financial auditing standards are upheld for companies covered by the Holding Foreign Companies Accountable Act”
  • “review the variable interest entity and subsidiary structures used by foreign-adversary companies to trade on United States exchanges, which limit the ownership rights and protections for United States investors, as well as allegations of fraudulent behavior by these companies”
  • “restore the highest fiduciary standards as required by the Employee Retirement Security Act of 1974, seeking to ensure that foreign adversary companies are ineligible for pension plan contributions"

Next Steps

More specific guidance is forthcoming. In his America First Trade Policy memorandum, President Donald Trump directed the Secretary of the Treasury to assess whether the existing outbound investment regulations “include[] sufficient controls to address national security threats” and deliver recommendations on potential modifications to the program by April 1, 2025. Other agencies given other trade-related directives in the America First Trade Policy memorandum were also instructed to issue reports by that date. We expect the proposals made in this Memorandum to feature prominently in this reporting.

Moreover, as explained, the Memorandum directs several agencies to promulgate rules to implement its directives. Although it is not clear whether the tasked agencies will issue proposed rules and solicit comments before issuing final rules — in the related context of export controls, for example, the Department of Commerce frequently issues “Interim Final Rules” that finalize automatically without an explicit step for comment and revision — at a minimum more information about the details of new restrictions will become available as rulemaking proceeds.

Sidley attorneys are closely monitoring changes in U.S. investment policy under the Trump administration and are available to answer your questions.